**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-KSB**





/X/
      Annual Report under Section 13 or 15(d) of the Securities Exchange Act of
      1934




For
      the fiscal year ended **December
      31, 2005**





/
      /
      Transition report under Section 13 or 15(d) of the Securities Act of
      1934




For
      the
      transition period from _______ to _______





Commission
      file number: **0-22413**





**UNIVEC,
      INC.**


(Name
      of
      Small Business Issuer in its Charter)





**Delaware**
            **11-3163455**(State
                or Other Jurisdiction of
            (I.R.S.
                EmployerIncorporation
                or Organization)
            Identification
                No.)







**822
      Guilford Avenue, Suite 208, Baltimore, MD 21202**


**(410)
      347-9959**


(Address
      and telephone number of principal executive office)


**Former
      address: 4810 Seton Drive, Baltimore, MD 21215**


**(Former
      name, former address, and former fiscal year, if changed since last
      report)**




Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Act:





Title
      of
      Class


Common
      Stock, $.001 par value




Check
      whether the issuer: (1) filed all reports required to be filed by


Section
      13 or 15(d) of the Exchange Act during the past 12 months (or for
      such


shorter
      period that the registrant was required to file such reports), and
      (2)


has
      been
      subject to such filing requirements for the past 90 days.


Yes
      /X/
      No / /





Check
      if
      there is no disclosure of delinquent filers in response to Item


405
      of
      Regulation S-B contained in this form, and no disclosure will be


contained,
      to the best of registrant's knowledge, in definitive proxy or


information
      statements incorporated by reference in Part III of this Form
      10-KSB


or
      any
      amendment to this Form 10-KSB. /X/





Revenues
      for the issuer's most recent fiscal year were $81,398.





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). [ ] Yes [X] No





The
      aggregate market value of the voting stock held by non-affiliates


computed
      by reference to the closing price at which the stock was sold on December 31,


2005
      was
      $1,144,602.









ISSUERS
      INVOLVED IN BANKRUPTCY PROCEEDINGS


DURING
      THE PAST FIVE YEARS





Check
      whether the issuer has filed all documents and reports required to


be
      filed
      by Section 12, 13 or 15(d) of the Exchange Act after the
      distribution


of
      securities under a plan confirmed by a court. Yes / / No / /





APPLICABLE
      ONLY TO CORPORATE REGISTRANTS





As
      of
      December 31, 2005 the issuer had 57,230,128 shares of common stock, $.001 par
      value, outstanding.





DOCUMENTS
      INCORPORATED BY REFERENCE


None





-1-


Part
      I





Item
      1.
      Description of Business.





UNIVEC,
      Inc. ("UNIVEC" or "the Company") is an integrated licensing, manufacturing,
      and
      marketing company dedicated to providing safer health products to patients
      and
      caregivers worldwide. Univec also assists pharmaceutical companies in marketing,
      fulfillment, and tracking drug samples. Univec produces auto-disable and safety
      syringes. The Company is a Delaware corporation incorporated on October 7,
      1996,
      and the successor by merger to UNIVEC, Inc., a New York corporation,
      incorporated on August 18, 1992.





On
      December 31, 2001 Univec, Inc., acquired Physician and Pharmaceutical Services,
      Inc., (PPSI) a company engaged in group purchasing (GPO) and promoting
      Pharmaceutical company prescription samples to physicians for their patients.
      PPSI reduces the cost in the prescription-sampling channel by providing
      efficient fulfillment and tracking of prescription usage. PPSI's national
      network of pharmacies fills the sample prescription on a discounted fee and
      the
      Company's mail service fulfillment complements additional needs. PPSI's approach
      conforms to regulations requiring increased accountability and elimination
      of
      diversion of prescription samples, consequently reducing the exposure of
      physicians and pharmaceutical companies to potential liabilities and
      non-compliance penalties. PPSI’s group purchasing programs provide for reduces
      prices on prescription drugs and other products through leveraged purchasing
      and
      closed system market share. Univec also is a distributor of a highly regulated
      pharmaceutical drug, methadone and other prescription drug
      products.





Univec
      during late 2004 established the company as a distributor of specialty and
      highly regulated pharmaceutical products. The company intends to expand the
      product line to take further advantage of its group purchasing and closed
      systems purchasing.





Univec
      extended its product line to include a highly regulated pharmaceutical
      (methadone) and other pharmaceutical products. The company will continue to
      sell
      it products through large United States based wholesalers as well as direct
      in
      large bulk to the larger customers of the company. The company’s group purchase
      programs and closed market purchasing positions the company’s product line
      well.




In
      1997,
      Univec commenced production and sales of its 1cc Auto-Disable Syringes
      (AD-syringes), which are designed to make accidental or deliberate reuse
      difficult. The accidental or deliberate reuse of syringes is a frequent cause
      of
      the spread of the human immunodeficiency ("HIV") and hepatitis viruses, as
      well
      as other blood-borne pathogens. Univec has received 510(k) clearance from the
      U.S. Food and Drug Administration (the "FDA") to market it's AD-Syringes in
      the
      United States.





Univec
      believes that its 1cc difficult-to-reuse syringes are more effective than
      competitive syringes and that they are competitively priced. Univec also
      believes that it is the only company that markets an AD-Syringe with a 1cc
      barrel, which is ideal for dispensing accurate dosages of medicine (e.g.,
      allergy, immunization and insulin medicines). It is more difficult to deliver
      up
      to a .95cc dosage accurately with a syringe barrel that is greater than 1cc.
      Univec does not know of any other company that offers a lcc aspirating syringe
      that can be locked. Healthcare workers need aspirating syringes to mix
      medications in the syringe barrel and inject medications intravenously.
      Furthermore, Univec believes that aspirating syringes are preferred by diabetes
      patients and needle-exchange programs. Pursuant to programs of international
      relief agencies, Univec has shipped its lcc AD-Syringes to over 80
      countries.





Univec
      also manufactures and markets patented Sliding Sheath Syringes designed to
      protect patients and healthcare workers from needle stick injuries, in
      compliance with the Federal Needlestick Safety and Prevention Act of the United
      States government, and requirements of the Occupational Safety and Health
      Administration (OSHA). Univec has FDA approval for an extendible barrel sleeve
      syringe used in the sliding sheath syringes based on technology licensed by
      Univec.




In
      addition, Univec has developed a Bifurcated Needle Safety Syringe specifically
      designed to comply with the Federal Needlestick Safety and Prevention Act of
      the
      United States government. Univec has been granted 510(k) clearance by the FDA.
      The device is intended for use in administering smallpox vacines in response
      to
      potential bio-terrorist threats. The Needlestick Safety mandate requires all
      U.S. healthcare providers to evaluate and implement safer medical devices under
      their OSHA "Exposure Control Plans". All healthcare providers must now adopt
      safer devices to protect workers and others from needles potentially
      contaminated with blood borne pathogens such as hepatitis B, hepatitis C, and
      HIV.




-2-





In
      general, this "safer device" rule applies in the normal course of operations,
      as
      well as in connection with any mass immunization program authorized by the
      federal government.





Univec
      markets its AD-Syringes and Sliding Sheath Safety Syringes to governments of
      developing countries, provided that such syringes are manufactured in the United
      States, private hospitals and health facilities in the United States, and
      distributors in the United States.





Problems
      Associated With Traditional Disposable Syringes





In
      developing countries, accidental or deliberate reuse of disposable syringes
      poses a serious risk of transmitting HIV-AIDS, hepatitis and other blood-borne
      pathogens. Relief agencies, including UNICEF and WHO, administered almost a
      billion immunizations to women and children through immunization programs in
      developing countries in 1998 and anticipate administering 3.5 billion
      immunizations by 2005. WHO reported that surveys carried out in four of its
      six
      regions indicated that up to a third of immunization injections were not
      sterile. Immunization injections account for less than 10% of injections
      administered within the health sector. The United Nations estimates that more
      than half of all non-immunization injections in developing countries are unsafe.
      According to WHO, an estimated 40.0 million adults and children worldwide are
      infected with HIV, 90% of who live in developing countries.





Intravenous
      drug users, who share syringes or use syringes discarded by hospitals, medical
      clinics and laboratories, doctors or diabetic patients, are extremely
      susceptible to HIV, hepatitis and other blood-borne pathogens. An article in
      the
      May 1996 American Journal of Public Health for Disease Control written by an
      epidemiologist for the Center for Disease Control and Prevention (the "CDC")
      estimates that nearly half of all new HIV infections are occurring in
      intravenous drug users. In the United States, up to 30% of pregnant mothers
      infected with HIV transmit the virus to their babies, according to the CDC.
      Based on a study of children with HIV, who received care at Children's Hospital
      of Wisconsin, researchers estimated that the mean total lifetime costs of caring
      for a child with HIV was close to $1 million.





As
      a
      result of findings in the United States and developing countries, public health
      officials have encouraged the medical industry to develop safer syringes to
      prevent the spread of blood-borne pathogens, such as HIV and hepatitis. In
      1995,
      the House of Delegates -- American Medical Association requested "manufacturers
      of disposable hypodermic needles and syringes to adopt designs to prevent reuse
      and to include in the packaging clear directions for their correct disposal."
      In
      late 1995, UNICEF and WHO recommended "the use of auto-disable syringes instead
      of disposable, single use syringes in order to avoid the hazards of unsafe
      injection practices."





Needlestick
      Prevention





Needlestick
      prevention devices are designed to prevent accidental puncture injuries
      to health care workers and patients before, during, and after the use of
      hypodermic syringes and needles. Statistics indicate that less than 1% of all reported
      HIV infections in the United States are attributed to needlestick injuries.
      The most prevalent needle stick prevention device, the extendible barrel
      sleeve, is not a substitute for features that render a syringe difficult-to-reuse;
      however, it can be combined with devices that make a syringe difficult-to-reuse.
      Needlestick prevention methods include:





Retracting
      Needles retract the needle into the barrel after use. These devices
      are effective needlestick prevention devices; however, operators must manually
      trigger the retraction of needles. Retracting needle devices that automatically
      trigger with a single use of the syringe can render the syringe design
      difficult to reuse. However, such devices are costly to manufacture due to
      the
      complexity of the mechanics required to retract the needle.





Self-Destruct
      Needles permit the needle to be collapsed or deformed into a shape,
      which cannot result in a needlestick injury. Although self-destruct needle devices
      are mechanically simpler than retracting needle devices, less prone to malfunction
      and less costly to manufacture, such devices are effective only if the
      operator triggers the self-destruct feature.





Extendible
      Barrel Sleeves enclose the barrel of the syringe in a second cylinder.
      The operator extends the sleeve before and after use to cover the tip
      o f
      the
      needle. The extendible barrel sleeves often lock in the extended position after
      use. In virtually all designs, the operator of the syringe must manually extend
      the barrel sleeve after use. The sleeve does not prevent multiple use of the
      syringe before the operator encloses the barrel. However, extendible barrel sleeves
      are more cost-effective than the other alternatives and can be combined with
      a
      device that makes the syringe difficult to reuse.




-3-







UNIVEC
      Syringes





Univec
      has developed a 1cc AD-Syringe for aspirating and non-aspirating applications,
      which are ideally suited for dispensing accurate dosages of allergy,
      immunization and insulin medicines. The Company's 1cc AD-Syringe can deliver
      dosages of up to .95cc. With the aspirating syringe, the UNIVEC locking clip
      does not limit the user's ability to withdraw and depress ("to aspirate") the
      plunger until the user locks the syringe voluntarily. With the non-aspirating
      syringe, the UNIVEC locking clip limits the user's ability to aspirate the
      plunger and locks the syringe passively.





When
      the
      non-aspirating syringes are assembled, the syringe clip is placed on the
      ratcheted plunger in the position needed to limit dosage as desired. When the
      operator depresses the plunger, the clip travels down the barrel by an equal
      distance. Withdrawal of the plunger by any amount embeds the prongs into the
      barrel and the user cannot retract the plunger.





Univec's
      1cc non-aspirating syringe was developed for the needs of immunization programs.
      Using existing components, the Company can limit its non-aspirating syringe
      to
      any dosage between .05cc and .95cc.





Univec's
      1cc aspirating syringe works similarly to the non-aspirating model, except
      that
      the clip prongs do not engage the barrel until the operator withdraws the
      plunger completely. Once the operator does so, the clip catches a single ratchet
      and travels down the barrel as the plunger is depressed and the operator cannot
      withdraw the plunger.





Univec's
      1cc aspirating syringe was developed for healthcare workers, who need to mix
      medications in the syringe barrel and inject medicines intravenously.
      Furthermore, the Company believes that aspirating syringes are preferred by
      diabetes patients and needle-exchange programs. The Company does not know of
      any
      other company that offers an aspirating syringe that can be locked.





Univec
      has licensed rights to a United States patent for a sliding sheath to function
      on all standard syringes. The Company believes that its licensed design for
      a
      safety syringe will compete successfully with the other safety syringes on
      the
      market. This design can be used on barrels of various sizes.





Marketing
      of Pharmaceutical Company Drug Samples to Physicians





PPSI
      patient StarterScript prescription drug program allows the physician to provide
      to the patient a cost effective means to support medication management from
      both
      a clinical and economic perspective. The patient sees if they may tolerate
      the
      medication under both the physician and pharmacist oversight.





The
      PPSI
      online network provides better marketing and clinical integration information
      than traditional systems, and enables pharmaceutical companies to maintain
      market share when competing with generic drugs. The PPSI information system
      includes detailed information such as the individual sales representative,
      zip
      codes, DEA number, pharmacy and prescribing physician. The PPSI system provides
      pharmaceutical companies with an easy, safe way to offer free samples through
      physicians and increase their value to patients who benefit through savings
      on
      prescriptions. In addition, the PPSI system provides incentives for chain drug
      stores to stock the pharmaceutical products and for pharmaceutical companies
      to
      keep their products on managed care formularies. Pharmaceutical manufacturers
      spend over $16 billion a year for the marketing of products. PPSI's strategy
      is
      to provide flexible sample programs supported by technology to assist with
      distribution, dispensing, reporting, and clinical integration that maximizes
      the
      intent of appropriate sample model for marketing.





Sales,
      Marketing and Distribution





Univec
      has entered into several agreements with large United States based wholesalers
      for the support and expansion of distribution channels for nationwide delivery
      of the Univec product line.





Univec
      also markets its StarterScript patient prescription sampling services to
      pharmaceutical companies desiring to maintain or expand market position. The
      company management believes that with the growth of third party payments of
      prescription drug such as Medicare and managed care companies the direct to
      consumer programs will grow. Univec also believes that with more branded
      pharmaceutical products coming off patent will further enhance direct patient
      sampling or StarterScript programs as an offense to generic drug
      substitution.





Univec
      has shipped its lcc AD-Syringes to over 80 countries. Univec intends to market
      its Safety-Shield syringes, as well as the Demolizer medical waste disposal
      system to governments of developing countries, private hospitals and health
      facilities in the United States, and distributors in the United States. Univec
      is a licensee of products and proprietary manufacturing processes relating
      to
      1cc AD-Syringes. For manufacturing in our facilities. The Company markets such
      syringes to governments of developing countries, private hospitals and medical
      facilities. To stimulate demand for its safety syringes, Univec plans to
      initiate promotional and educational campaigns directed at (i) public health
      officers and other government officials responsible for public health policies,
      (ii) doctors and administrators of healthcare facilities responsible for
      treatment of HIV-AIDS and hepatitis patients, and (iii) liability insurance
      companies.





Univec
      also markets its drug sampling services to pharmaceutical companies desiring
      to
      maintain or expand market position.





Production





Univec's
      lcc locking syringes are being assembled by contract manufacturers in the United
      States and foreign countries. (See Item 1, "Description of Business" and Item
      3
      "Legal Proceedings" for the current status of the Company's business. The United
      States manufacturers also mold the Company's proprietary syringe plungers.
      Univec owns stamping, assembly, and molding equipment at its U.S. contract
      manufacturer. Univec relocated its clip plunger assembly production facility
      designed to produce 1cc AD-Syringes from Farmingdale, New York to Baltimore,
      Maryland during July 2003. These assemblies are shipped to our contract
      manufacturers to produce Auto-Disable Syringes.





Univec's
      syringes consist of a standard needle, barrel, rubber stopper, a ratcheted
      plunger designed by the Company, and a pronged stainless steel locking clip
      designed by Univec. The locking clip and plunger can be assembled, with minor
      modifications, into barrels manufactured by Becton-Dickinson, Tyco, and other
      syringe manufacturers. Univec has obtained a patent on its stainless steel
      locking clip, and has been granted a patent for the design of a plunger which,
      when combined with the locking clip, results in a narrow-barreled,
      difficult-to-reuse, locking syringe. The stainless steel for the locking clip
      and the plastic for the syringe barrels and plungers is readily available from
      several sources. The syringe barrels for some of the syringes sold by Univec
      have been manufactured by a Portuguese contract manufacturer. Univec has been
      successful through other sources worldwide in purchasing barrels to increase
      the
      overall production capacity. In addition, Univec continues to send clip plunger
      assemblies produced in the U.S. to syringe manufacturers to also increase
      overall production. Univec continues to pursue alternate sources of supply
      for
      components. Should there be a need for a certain component from an alternate
      supplier, there can be no assurance that the Company will be able to obtain
      it
      on acceptable terms, and there can be no assurance that production of certain
      configurations of its lcc locking syringes will not be delayed. Delays resulting
      from the selection of an alternate supplier to produce certain components could
      have a materially adverse effect on Univec's business.







-4-







Competition





Univec's
      principal competition for syringes is from traditional disposable syringes.
      Becton-Dickinson, Tyco and Terumo control approximately 90% of the worldwide
      syringe market, and are substantially larger, more established and have
      significantly greater financial, sales and marketing, distribution, engineering,
      research and development and other resources than the Company. To Univec's
      knowledge, only Becton-Dickinson and Bader, a German machine tool manufacturer,
      distribute commercially a line of difficult-to-reuse syringes, none of which
      allow for aspiration. The Bader DestroJect syringe and the Becton-Dickinson
      SOLOSHOT syringe were designed to dispense a dosage of .5cc only, whereas the
      UNIVEC 1cc locking clip syringe was designed to dispense dosages up to .95cc.
      Univec believes that UNIVEC syringes are more effective than competitors'
      difficult-to-reuse syringes and that the UNIVEC syringes are competitively
      priced. There can be no assurance that the major syringe manufacturers or others
      will not commence production of 1cc difficult to-reuse-syringes, or locking
      syringes which aspirate, or that Univec will be able to successfully compete
      in
      this market.





PPSI's
      competition comes from traditional sampling providers that include the actual
      drug samples and other pharmaceutical benefit management companies that offer
      similar services such as Caremark and Medco Health.





Patents,
      Licenses and Proprietary Rights





In
      1995,
      Univec was granted a United States patent for a locking clip device not biased
      against the plunger. The patent is broad enough to include several applications
      of the design covering the first series of products to be marketed by Univec.
      Univec was granted a United States patent for a plunger design which, in
      conjunction with its patented locking clip, results in a narrow barrel,
      difficult-to-reuse syringe that allows for aspiration during use.





In
      the
      past, Univec has filed patent applications for its locking clip and aspirating
      plunger in certain foreign countries participating in the Patent Cooperation
      Treaty (Canada, Brazil, Mexico, certain European countries, Japan, South Korea,
      China, Russia and Australia). However, patent applications filed in foreign
      countries and patents granted in such countries are subject to laws, rules
      and
      procedures that differ from those in the United States, and accordingly, patent
      protection in such countries may be different from patent protection provided
      by
      United States laws. In December 2003, to settle an outstanding note with
      Syrinter, Ltd. (Switzerland), the Company assigned certain patents for the
      1cc
      auto-disabled syringe as in full payment of the note and interest thereon.
      The
      Company in turn received relief from restrictive patent payments and a perpetual
      license to exploit these patents provided manufacturing occurs in the United
      States. In addition, the Company will continue to receive 15% of future
      royalties being earned from the licensing of these items.





Univec
      has registered trademarks UNIVEC(R), and Rx Ultra(R), Rx Plus, The Univec Crest
      and the symbol representing no second use, (i.e., the number 2 crossed out
      inside of a circle), with the United States Patent and Trademark
      Office.





In
      March
      2001, Univec exercised an option to acquire a license of a component for a
      period of the later of ten years or the expiration of the last patent relating
      to the component and its improvements, with the right to terminate the agreement
      if the Company fails to produce and ship at least ten million of this component
      within three years. Univec is committed to pay a royalty of $.001, per component
      sold, with an advance royalty fee of $15,000 previously paid. As of December
      31,
      2005, Univec has sold only an insignificant amount subject to royalties under
      this agreement.





In
      July
      2000, Univec received FDA approval of the sliding sheath syringe and began
      to
      manufacture and market this product in 2001.





In
      August
      2000, Univec entered into a licensing agreement providing for the non-exclusive,
      worldwide use of Univec patents for the manufacturing, use and marketing of
      its
      auto-disable syringes through the period any patents are still in effect,
      providing for royalties on sales and for the sale of equipment necessary to
      manufacture the product. In accordance with this agreement, Univec has earned
      royalties of $0 and $30,284 for the years ended December 31, 2005 and 2004,
      respectively.







-5-








In
      2003
      the Company assigned certain patents to a creditor in payment of an amount
      due
      and also assigned the future royalties under the auto-disable syringe licensing
      agreement. The Company has licensed back the rights under these patents to
      market and manufacture in North America.





In
      2004
      the Company applied for and received a Provisional Patent from the U.S. Patent
      and Trademark Office on September 21, 2004, the Patent #60/611,670 and Foreign
      Filing License Granted October 15, 2004, code US60/611,670. However, patent
      applications filed in foreign countries and patents granted in such countries
      are subject to laws, rules and procedures that differ from those in the United
      States, and accordingly, patent protection in such countries may be different
      from patent protection provided by United States laws. In brief description,
      a
      medical device with a sliding sheath to protect caregivers in the dental and
      the
      cosmetic market.




Revenue
      Recognition





As
      a
      result of the differing circumstances related to the Company’s manufacture,
      procurement, distribution and physician sampling programs diverse financial
      accounting methods are utilized to recognize revenue from its various revenue
      sources. The Company’s manufacturing and specialty pharmaceutical drug
      distribution programs employ the “gross” method of recognizing revenue. However,
      because of the distinctive type of services provided to customers, the GPO
      and
      physician sampling programs utilize the “net” method of revenue recognition.





Government
      Regulation





The
      manufacture and distribution of medical devices are subject to extensive
      regulation by the FDA in the United States, and in some instances, by foreign
      and state regulatory authorities. Pursuant to the Federal Food, Drug, and
      Cosmetic Act, as amended, and the regulations promulgated there under
      (collectively, the "FDC Act"), the FDA regulates the clinical testing,
      manufacture, labeling, sale, distribution and promotion of medical devices.
      Before a new device can be introduced into the market, a manufacturer must
      obtain FDA permission to market through either the 510(k) pre-market
      notification process or the costlier, lengthier and less certain pre-market
      approval ("PMA") application process. With the 510(k) notification, the Company
      may sell its 1cc locking clip syringe in the United States, subject to
      compliance with other applicable FDA regulatory requirements. As a Class II
      device, performance standards may be developed for the 1cc locking clip syringe
      which the product would then be required to meet. Failure to meet standards
      for
      effectiveness and safety could require the Company to discontinue the
      manufacturing and/or marketing of the product in the United States. Furthermore
      manufacturers of medical devices are subject to record-keeping requirements
      and
      required to report adverse experiences relating to the use of the device. Device
      manufacturers are also required to register their establishments and list their
      devices with the FDA and with certain state agencies and are subject to periodic
      inspections by the FDA and certain state agencies.





Medical
      devices are subject to strict federal regulations regarding the quality of
      manufacturing ("Good Manufacturing Practices" or "GMP"). GMP regulations impose
      certain procedural and documentation requirements upon the Company with respect
      to manufacturing and quality assurance activities. The FDA conducts periodic
      audits and surveillance of the manufacturing, sterilizing and packaging
      facilities of medical device manufacturers to determine compliance with GMP
      requirements. These procedures may include a product recall or a "cease
      distribution" order which would require the manufacturer to direct its
      distributors and sales agents to stop selling products, as well as other
      enforcement sanctions. Univec's manufacturing facilities have not been certified
      as satisfying GMP requirements. Univec's facilities will be subject to extensive
      audits in the future, pursuant to standard FDA procedure. No assurance can
      be
      given that when the Company is audited that it will be found to be in compliance
      with GMP requirements, or that if it is not found in compliance, what penalties,
      enforcement procedures or compliance effort will be levied on or required of
      the
      Company. To date, Univec has not been audited by the FDA. The FDA also has
      the
      authority to request repair, replacement or refund of the cost of any device
      manufactured or distributed by the Company, and the failure to meet standards
      for safety and effectiveness could require the Company to discontinue marketing
      and/or manufacturing its product in the United States.





The
      introduction of Univec's products in foreign markets will also subject Univec
      to
      foreign regulatory clearances which may impose additional substantive costs
      and
      burdens. International sales of medical devices are subject to the regulatory
      requirements of each country. The regulatory review process varies from country
      to country. Many countries also impose product standards, packaging
      requirements, labeling requirements and import restrictions on devices. In
      addition, each country has its own tariff regulations, duties and tax
      requirements. Univec's products are required to satisfy international
      manufacturing standards for sale in certain foreign countries.





The
      approval by the FDA and foreign government authorities is unpredictable and
      uncertain, and no assurance can be given that the necessary approvals or
      clearances for the Company's products will be granted on a timely basis or
      at
      all. Delays in receipt of, or a failure to receive, such approvals or
      clearances, or the loss of any previously received approvals or clearances,
      could have a materially adverse effect on the business, financial condition
      and
      results of operations of the Company. Furthermore, approvals that have been
      or
      may be granted are subject to continual review, and later discovery of
      previously unknown problems may result in product labeling restrictions or
      withdrawal of the product from the market. Moreover, changes in existing
      requirements or adoption of new requirements or policies could adversely affect
      the ability of Univec to comply with regulatory requirements. There can be
      no
      assurance that Univec will not be required to incur significant costs to comply
      with applicable laws and regulations in the future. Failure to comply with
      applicable laws or regulatory requirements could have a materially adverse
      effect on Univec's business, financial position and results of
      operations.








-6-








Research
      and Development





For
      the
      years ended December 31, 2005 and 2004, Univec expended $3,802 and $28,871,
      respectively, on product development expenses.





Employees





As
      of
      December 31, 2005, Univec employed four persons, including two full time in
      sales and marketing, one full time in financial administration, and one full
      time in production. None of Univec's employees is covered by a collective
      bargaining agreement.





As
      of
      December 31, 2005, PPSI had no employees, but utilizes outside marketing
      representatives and consultants for marketing and employees of affiliated
      companies, owned by a stockholder/officer of the Company, to provide certain
      administrative services. These expenses, together with other expenses, have
      not
      been allocated between these companies.




Item
      2.
      Description of Property.





Univec
      occupied a production facility, warehouse, administrative, and executive offices
      in Baltimore, MD (comprised of approximately 22,000 square feet of space)
      pursuant to a lease that expired on July 15, 2004 with ten (10) renewable one
      (1) year option terms which are automatically renewable by Univec. Rental
      expense for the space is $72,000 per annum plus certain common charges,
      maintenance costs and real estate taxes, subject to a maximum increase of 3%
      for
      each three year term. The lease on this facility was terminated on February
      6,
      2006.





Item
      3.
      Legal Proceedings.





In
      February 2000, a former consultant commenced an action against the Company
      and
      its directors, Alleging breach of contract and fiduciary duty, and is seeking
      consulting fees in the amount of: (1) 250,000 shares of common stock, (2)
      $192,000 and (3) costs of this action. The Company and counsel do not believe
      the consulting fees are due and will continue to vigorously defend this
      action.







-7-








Item
      4.
      Submission of Matters to Vote of Security Holders




The
      Annual Meeting of Stockholders of Univec, Inc. for the year ended December
      31,
      2004, was held on October 14, 2005, to consider and vote upon a proposal to
      elect S. Robert Grass, Dr. David Dalton and William Wooldridge as
      directors.





A
      second
      proposal was presented and voted upon to amend the Articles of Incorporation
      to
      effect a one-for-ten reverse stock split of the issued and outstanding shares
      of
      common stock and correspondingly to decrease the share capital from 75,000.000
      shares to 7,500,000 shares, then to increase the share capital from 7,500,000
      shares to 50,000,000 shares on a date to be determined by the Board of
      Directors.





A
      third
      proposal was considered and voted upon to give authorization to the Board of
      Directors to change the name of the corporation to another or new name on a
      date
      to be determined by the Board of Directors.




The
      number of votes cast for and the number of abstentions are set forth
      below:





Proposal
      1 **-** Election
      of Directors


For
            
            WithholdS.
                Robert Grass
            
            35,227,022
            
            0David
                Dalton
            
            35,227,022
            
            0William
                Wooldridge
            
            35,227,022
            
            0




Proposal
      2 **-** To
      amend
      the Articles of Incorporation to effect a one-for-ten reverse stock split of
      the
      issued and outstanding shares of common stock and correspondingly to decrease
      the share capital from 75,000.000 shares to 7,500,000 shares, then to increase
      the share capital from 7,500,000 shares to 50,000,000 shares on a date to be
      determined by the Board of Directors.


For
            
            WithholdTotal
                vote result for Proposal 2
            
            35,227,022
            
            0





Proposal
      3 **-** To
      give
      authorization to the Board of Directors to change the name of the corporation
      to
      another or new name on a date determined by the Board of Directors.


For
            
            WithholdTotal
                vote result for Proposal 3
            
            35,227,022
            
            0







-8-








I tem
      5.
      Market for Common Equity and Related Stockholder Matters.





(a)(1)
      Prior to July 2, 1999, the Company's Common Stock and redeemable Common Stock
      Purchase Warrants (expired April 2002) traded on the Nasdaq SmallCap Market.
      Following that date, the common stock and warrants have been quoted on the
      OTC
      Bulletin Board under the symbols "UNVC" and "UNVCW", respectively.





Set
      forth
      below are the high and low closing sale prices for the Common Stock on the
      over-the-counter bulletin board from January 1, 2004 through December 31, 2005
      and the first quarter of 2006.





Common
                Stock("UNVC")Quarter
                Ended
            High
            LowMarch
                31, 2004
            $
                0.150
            $
                0.090June
                30, 2004
            $
                0.120
            $
                0.070September
                30, 2004
            $
                0.090
            $
                0.060December
                31, 2004
            $
                0.110
            $
                0.040March
                31, 2005
            $
                0.120
            $
                0.080June
                30, 2005
            $
                0.110
            $
                0.030September
                30, 2005
            $
                0.050
            $
                0.020December
                31, 2005
            $
                0.040
            $
                0.020March
                31, 2006
            $
                0.020
            $
                0.020








(1)
      As of
      December 31, 2005, there were 120 holders of record of the Common
      Stock.





(2)
      During the fiscal year ended December 31, 2005, Univec sold unregistered
      securities to a limited number of persons in transactions exempt from the
      registration requirements of the Securities Act, as described below. Except
      as
      indicated, there were no underwriters involved in the transactions, and there
      were no underwriting discounts or commissions paid in connection therewith.
      The
      purchasers of securities in each such transaction represented their intention
      to
      acquire the securities for investment only and not with a view to or for sale
      in
      connection with any distribution thereof and appropriate legends were affixed
      to
      the certificates for the securities issued in such transactions. All purchasers
      of securities in each such transaction had adequate access to information about
      Univec, and in the case of transactions exempt from registration under Section
      4(2) of the Securities Act, were sophisticated investors.




1.
      On
      January 10, 2005, the Company issued 698,893 shares of common stock to officers
      of the Company in exchange for payroll earned of $35,364. During March 2005,
      another 250,000 common shares were issued to an officer in exchange for payroll
      earned of $20,400.




2.
      On
      January 10, 2005, the Company issued 339,087 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $17,158.





3.
      On
      January 20, 2005, the Company issued 804,688 common shares to a preferred
      stockholder in exchange for 30 shares of Series E preferred stock and unpaid
      dividends worth an aggregate of $32,188.





4.
      During
      March 2005, the Company sold 350,000 common shares to independent investors
      for
      $35,000.





5.
      On
      March 9, 2005, the Company sold 20,833 Series D Preferred shares for $50,000.





6.
      On
      April 6, 2005, the Company issued 1,386,527 common shares to a preferred
      stockholder in exchange for 70 shares of Series E preferred stock and unpaid
      dividends worth an aggregate of $5,843.





7.
      On
      June 28, 2005, the Company issued 1,896,970 shares of common stock to two


officers
      in exchange for operating expenses incurred by them but not previously
      paid.





8.
      On
      June 29, 2005, the Company issued 1,500,000 shares of common stock to an
      independent marketing consultant in exchange for fees not paid of
      $45,000.





9.
      On
      June 30, 2005, the Company issued 1,286,082 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $42,441.




10.
      On
      June 30, 2005, the Company converted $70,000 of notes payable to an affiliated
      company owned by an executive officer in exchange for 2,333,333 shares of common
      stock.





11.
      On
      October 10, 2005, the Company issued 1,169,850 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $12,868.







-9-




Item
      6.
      Management's Discussion and Analysis




The
      following discussion and analysis should be read in conjunction with Univec,
      Inc's ("Univec", "we" or "our"), consolidated financial statements,including
      the
      notes thereto, appearing elsewhere in this report.





Condensed
      Consolidated Results of Operations





2005
            
            2004
            
            ChangeRevenues
            
            $
            81,398
            
            $
            327,827
            
            
            (75
            %)


Cost
                of Revenues
            
            
            13,836
            
            
            128,933
            
            
            (89
            %)


Gross
                Margin
            
            
            67,562
            
            
            198,894
            
            
            (66
            %)Expenses:Marketing
                and SellingExpense
            
            
            233,990
            
            
            123,400
            
            
            90
            %Product
                Development
            
            
            3,802
            
            
            28,871
            
            
            (87
            %)General
                andAdministrative
            
            
            1,518,840
            
            
            1,772,246
            
            
            (14
            %)Interest
                Expense, Net
            
            
            200,019
            
            
            108,092
            
            
            85
            %Gain
                on Extinguishmentof Debt
            
            
            
            
            
            (144,819
            )
            
            -Loss
                on write-off ofGoodwill
            
            
            
            
            
            1,774,119
            
            
            -Other
                Income
            
            
            
            
            
            (47,795
            )
            
            -Total
                Continuing Expenses
            
            
            1,956,651
            
            
            3,614,114
            
            
            (46
            %)Discontinued
                Operations
            
            
            
            
            
            (8,260
            )
            
            -Loss
                on sale of Subsidiary
            
            
            
            
            
            (597,056
            )
            
            -Net
                Loss
            
            $
            (1,889,089
            )
            $
            (4,020,536
            )
            
            (53
            )%





Sales
      within PPSI’s GPO comprised 50% of the total sales for 2005. The GPO program
      utilizes the “net” method of revenue recognition.


A
      breakdown of revenues and cost of revenues for 2005 between the Company and
      its
      wholly-owned subsidiary, PPSI, are as follows:





Univec
            PPSI
            TotalRevenue
            $40,793
            $40,605
            $81,398Cost
                of Revenues
            13,836
            
            13,836Gross
                Margin
            $26,957
            $
                40,605
            $
                67,562




The
      Company has its focus on the marketing, production, development and distribution
      of its pharmaceutical and proprietary products and licensing of the technology
      of its insulin and tuberculin sliding sheath safety syringes.





Sales
      within PPSI’s GPO program utilizing the “net” revenue recognition comprised 50%
      and 82% of the total revenue for 2005 and 2004, respectively.





Gross
        profit for the year ended December 31, 2005 increased to 83% from 61% in
        2004.
        Gross profit based on product sales for 2005 decreased to $67,562 as compared
        to $198,894 in 2004. The reduced gross profit is primarily due to the lower
        sales revenue and lower gross profit contribution from PPSI’s GPO
        revenue and
        also
        from lower sales volume of our 1cc clip syringe. The
        reduction of syringe
        gross profit is largely the result of decreased sales volume.
        We anticipate
        gross profit levels to remain at current levels, unless we increase
 our
        market penetration, our prices, product mix and/or realize anticipated production
        or economic benefits that we anticipate as a result of our relocation to
        Maryland from New York during 2003 and our 2004
        financings.




-10-





As
      a
      result of the acquisitions of PPSI, we have broadened our pharmaceutical product
      distribution base. We anticipate increases in sales on a period by period basis
      from PPSI if we can increase our market penetration in these areas. However,
      during 2005 our largest CPO customer was unable to renew a significant contract,
      which resulted in a significant loss of sales by PPSI.





Marketing
      and selling costs in 2005 increased $110,590 (90%) from 2004. This increase
      is
      attributable primarily to increases in compensation and consulting costs, which
      were as a result of our increased efforts to increase corporate
      revenues.





Product
      development expense for 2005 decreased by $25,069 (87%) as compared to 2004.
      This decrease was the result of reduced expenditures for product design and
      engineering costs, which were curtailed until financing became available to
      market a new medical syringe with a sliding sheath to protect caregivers in
      the
      dental and the cosmetic market.





General
      and administrative expenses for the year ended December 31, 2005 decreased
$253,406
      (14%) as compared to 2004. This decrease is due primarily to reductions
      in compensation, insurance, equipment costs and securities maintenance expenses
      offset in part by increases in professional fees and travel costs.





Interest
      expense for the year ended December 31, 2005 increased by $91,927 (85%) as
      compared to 2004 primarily as a result of increased debt outstanding during
      2005.





Other
      income for the year ended December 31, 2004 included $36,349 gain on the sale
      of
      marketable securities plus $11,446 gain on the sale of
      equipment.


Net
        loss
        for 2005 decreased by $2,131,447 (53%) primarily due to the 2004 nonrecurring $1,774,119
        write-off of goodwill and a 2004 loss of $597,056 on the sale of a subsidiary. The
        subsidiary was sold during August 2004 in order to reduce fixed costs associated with
        its
        operation. Without considering the 2004 nonrecurring loss on the write-off
        of
        goodwill, the
        2004
        loss on the sale of a subsidiary and the offsetting 2004 gain on extinguishment
        of debt
        of
        $144,819, the Company’s net loss before non-recurring items increased by
        $94,909. This increased
        portion of the Company’s net loss was primarily related to the $131,332
        reduction in
        gross
        profit.


Liquidity
      and Capital Resources


The
        working capital deficit of $4,207,570 at December 31, 2004, increased to
        a
        deficit of $5,072,075 at
        December 31, 2005. This reduction of working capital is primarily attributable
        to the Company’s $1,889,089
        net loss. However, net decreases in accounts receivable and increases in
        deferred compensation
        were partially offset by decreases in accounts payable and accrued expenses
        and also
        by a
        decrease in total loans payable. All of these factors contributed to the
        overall
        decrease in
        working capital.
 
 The
        accompanying financial statements have been prepared on a going concern basis,
        which contemplates
        the realization of assets and the satisfaction of liabilities in the normal
        course of business. As
        of
        December 31, 2005, the Company had negative working capital of $5,072,075
        and a
        stockholders' deficit
        of $4,855,528 and incurred net losses of $(1,889,089) and $(4,020,536) for
        the
        years ended December
        31, 2005 and 2004, respectively. These factors, among others, indicate that
        the
        Company's continuation
        as a going concern is dependent upon its ability to obtain adequate financing
        and/or achieve
        profitable operations. The financial statements do not include any adjustments
        related to the
        recoverability and classification of recorded asset amounts or the amounts
        and
        classification of liabilities
        that might be necessary should the Company be unable to continue in
        existence.


Management
      is currently seeking additional investment capital to support its entrance
      intonew business ventures and provide the capital needed to
      operate.





Net
      cash
      used in operating activities decreased by $428 ,502 (57%) to
      $319,482 for theyear ended December 31, 2005 from 2004, primarily due to the
      continued net loss.




Net
      cash
      provided by investing activities of $326,907 resulted from the redemption of
      restricted cashdeposits, which was partially offset by the purchase of fixed
      assets during 2005.




Net
      cash
      used in financing activities increased by $1,544,628 (102%) to $(35,877) for
      2005 from $1,508,751 provided during 2004. This increase in net cash used in
      financing activities resulted from a decrease in aggregate borrowings of
      $1,363,827 and an increase in aggregate repayments of borrowings of
      approximately $218,969. There was also an $85,000 non-recurring sale of
      securities during 2005.




Although
      revenue decreased as a result of the 2005 PPSI GPO operations for the year
      ended
      December 31, 2005, we continued to market our safety syringes. We suffered
      from
      a serious shortage of working capital, which resulted in the Company’s limited
      ability to market and sell its products.






-11-






In
      July
      2004, the Company borrowed an aggregate of $1,000,000 from a city development
      agency,a state development agency and a stockholder. These proceeds provided
      us
      with resources to acquire equipment, refinance an equipment capital lease and
      for working capital to enable us to continue to implement our business strategy.
      The proceeds from the above loans and our designation as a minority business
      enterprise (MBE) should increase our marketing service capabilities to
      pharmaceutical companies and to develop new products.





Unless
      we
      introduce new products or increase our market share Univec’s management
      anticipates that operations will generate a negative cash-flow during our next
      fiscal year, but there can be no certainty this will occur.




The
      relatively low trading price and volume of our common shares hampers our ability
      to raise equity capital. There is no assurance that any such equity financing
      will be available to the Company or on terms we deem favorable. Management
      will
      continue its efforts to obtain debt and/or equity financing.




Significant
      Estimates





Univec's
      business plan upon acquiring PPSI was to fully utilize each other's capabilities
      to increase their sales and profitability. Although a shortage of cash flow
      has
      slowed the plan, management has reviewed the carrying amount of goodwill and
      fixed assets. We have considered all the circumstances, specifically the fair
      value based on current and anticipated future undiscounted cash flows. In
      addition, as part of our relocation strategy, various production equipment
      is
      being reevaluated. During 2004, the Company determined that the goodwill with
      a
      carrying value of $1,774,119 had been fully impaired and has written-off the
      entire balance.




New
      Accounting Pronouncements





Management
      does not believe that any recently issued, but not yet effective accounting
      pronouncements, if adopted, would have a material effect on the accompanying
      financial statements. Financial Accounting Standards Board Statement # 123R
      Stock Based Compensation is not expected to have a material effect on the


Company’s
      financial statements.





Major
      Customer





For
      the
      year ended December 31, 2005, our largest customer was a company owned by our
      chief executive officer. We intend to reduce our reliance on this customer
      through expanding sales to other parties.





Forward
      Looking Statements





Except
      for the historical information contained herein, the matters discussed in this
      report are forward-looking statements that involve risks and uncertainties,
      including market acceptance of Univec's products, timely development and
      acceptance of new products, impact of competitive products, development of
      an
      effective organization, interruptions to production, and other risks detailed
      from time to time in Univec's SEC reports and its Prospectus dated April 24,
      1997 (as supplemented by the Prospectus Supplement dated April 29, 1997) forming
      a part of its Registration Statement on Form SB-2 (File No.333-20187), as
      amended, which was declared effective by the Commission on April 24,
      1997.




Item
      7.
      Financial Statements.





The
      financial statements follow Item 13 of this report.





Item
      8.
      Changes in and Disagreements with Accountants on Accounting and


Financial
      Disclosure.





A
      Form
      8-K was filed on June 13, 2005 and amended by two Forms 8-K/A filed on August
      1,
      2005 and January 11, 2006. These filings reported the resignation of the
      Company’s principal registered independent public accounting firm. Further, the
      Registrant reported that the auditor’s report for the previously issued Form
      10-KSB for the year ended December 31, 2003 could no longer be relied upon.
      Also, the former principal registered independent public accounting firm has
      informed the Registrant that it may no longer rely upon review reports issued
      for all Form 10-QSB for all quarters starting with the quarter-ended March
      31,
      2003 through the quarter-ended September 30, 2004.





The
      Company did file a Form 10-KSB amendment on January 11, 2006. This report bore
      a
      qualification as to the Company’s ability to continue as a going
      concern.






-12-






Item
      8A
      CONTROLS AND PROCEDURES





(a)
      Explanation of disclosure controls and procedures. The Company's chief executive
      officer and its chief financial officer after evaluating the effectiveness
      of
      the Company's disclosure controls and procedures (as defined in Exchange Act
      Rules 13a-14(c) and 15-d-14(c) as of a date before December 31, 2005 (the
      "Evaluation Date") have concluded that as of the Evaluation Date, the Company's
      disclosure controls and procedures were adequate and effective to ensure that
      material information relating to the Company and its consolidated subsidiaries
      would be made known to them by others within those entities, particularly during
      the period in which this report was being prepared.





(b)
      Changes in internal controls. There were no significant changes in the Company's
      internal controls or in other factors that could significantly affect the
      Company's disclosure controls and procedures subsequent to the Evaluation Date,
      nor any significant deficiencies or material weaknesses in such disclosure
      controls and procedures requiring corrective actions. As a result, no corrective
      actions were taken.




Item
      III




Item
      9.
      Directors, Executive Officers, Promoters and Control Persons;


Compliance
      With Section 16(a) of the Exchange Act.




Directors,
      Executive Officers and Key Employees





The
      directors, executive officers and key employees of Univec are as


follows:





Name
            Age
            PositionDr.
                David Dalton
            57
            Chief
                Executive Officer, President and a DirectorS.
                Robert Grass
            72
            Chairman
                of the Board of DirectorsWilliam
                Wooldridge
            60
            DirectorRaphael
                Langford
            61
            Chief
                Operating Officer and Executive Vice PresidentMichael
                Lesisko
            56
            Treasurer,
                Secretary and Chief Financial
                Officer








Dr.
      David
      Dalton assumed the position of President and Chief Executive Officer of the
      Company on January 1, 2002, concurrent with the acquisition by Univec, Inc.
      of
      Physician and Pharmaceutical Services, Inc. (PPSI), a Baltimore based company
      founded by Dr. Dalton. Dr. Dalton has over 35 years experience in the healthcare
      industry, including 18 years with Rite-Aid where he served as Corporate Vice
      President.





Dr.
      Dalton founded Health Resources, Inc., in 1983, a pharmacy service provider
      having contracts with over 50,000 retail pharmacies for billing and payment
      of
      prescription orders through plan providers. HRI is recognized as one of the
      leading Black Enterprises in the United States. Dr. Dalton also founded Pharmacy
      Services, Inc., a pharmacy fulfillment center for correctional and other
      institutions, with facilities in Maryland, Tennessee and
      Pennsylvania.





On
      March
      15, 2002 S. Robert Grass was elected a director of Univec. He was elected
      Chairman of the Board of Directors in May, 2002. Mr. Grass has been associated
      with the pharmaceutical and medical device industry for over thirty-two years.
      Mr. Grass developed a chain of pharmacies known as White Shield Drugstores
      in
      Pennsylvania, serving as President, Chief Executive Officer and Chairman of
      the
      Board from 1970 to 1996. Mr. Grass also served as Chief Executive Officer and
      Chairman of the Board of Managed Care RX, a drug fulfillment and mail order
      business from 1994 to 1999.






-13-




William
      Wooldridge has been a director since August 5, 2003. Mr. Wooldridge is a
      recognized and respected entrepreneur. He is the founder of MedEcon, Inc. one
      of
      the largest group purchasing organizations in the United States. Over a
      twenty-eight year period he has developed a corporation with medical portfolio
      sales in excess of $3.5 billion. In 1999, Mr. Wooldridge formed OrderButton.Net,
      a new web-based transaction processing service that facilitates the
      establishment of merchant sites on the internet. Since 2002, Mr. Wooldridge
      has
      been developing a franchised, non-traditional based photography
      company.




Raphael
      Langford has been Chief Operating Officer of the Company since April 2003.
      Prior
      to April 2003, Mr. Langford was the Executive Director of the National
      Foundation of Women Legislators. Mr. Langford served as liaison to Federal
      and
      State elected officials. Mr. Langford has over thirty-five years experience
      in
      senior management positions with AT&T, Inc., Norton Simon, Inc. and other
      telecommunications entities. Mr. Langford is a past president and past Chief
      Executive Officer of Olympic International, Inc. This company is an
      international broker and manufacturing network of raw materials to third world
      countries.





Michael
      Lesisko, a certified public accountant, was named as Chief Financial Officer
      of
      Univec on September 9, 2002. Mr. Lesisko was named Treasurer and Secretary
      of
      Univec on February 11, 2003. From June 1996 to September 2002 Mr. Lesisko was
      a
      CPA in public practice. He served as Vice President of Finance of CarrerCom
      Corporation and Subsidiaries from November 1988 to May 1996. Prior thereto,
      he
      served as a partner with KPMG Peat Marwick from July 1982 to August 1988, where
      he managed financial audits and a diverse tax practice.





All
      directors hold office until the annual meeting of stockholders of the Company
      following their election or until their successors are duly elected and
      qualified. Officers are appointed by the Board of Directors and serve at its
      discretion.





Meetings
      of the Board of Directors and Information Regarding Committees





The
      Board
      of Directors has two standing committees, an Audit Committee and a Compensation
      Committee. On June 21, 2005, William Wooldridge was elected to the Audit
      Committee. The duties of the Audit Committee include recommending the engagement
      of independent auditors, reviewing and considering actions of management in
      matters relating to audit functions, reviewing with independent auditors the
      scope and results of its audit engagement, reviewing reports from various
      regulatory authorities, reviewing the system of internal controls and procedures
      of Univec, and reviewing the effectiveness of procedures intended to prevent
      violations of law and regulations. TheAudit Committee held two meetings in
      2005.
      On October 14, 2005, Mr. S. Robert Grass was elected to the Compensation
      Committee. There was one meeting of the Compensation Committee in
      2005.





The
      Board
      of Directors held seven meetings in 2005, which included special telephonic
      meetings. All Directors attended at least 75% of the total number of Board
      meetings and meetings of committees on which they served during the period
      they
      served thereon during 2005.





Section
      16(a) Beneficial Ownership Reporting





Section
      16(a) of the Securities Exchange Act of 1934 requires Univec's Officers,
      Directors and persons who own more than ten percent of a registered class
      ofUnivec's equity securities within specified time periods to file certain
      reports of ownership and changes in ownership with the Securities and Exchange
      Commission (the "Commission"). Officers, Directors and ten percent stockholders
      are required by regulation to furnish Univec with copies of all Section 16(a)
      forms they file. Based solely on a review of copies of such reports received
      by
      Univec and written representations from such persons concerning the necessity
      to
      file such reports, Univec is not aware of any failures to file reports or report
      transactions in a timely manner during the fiscal year ended December 31,
      2005.






-14-





Item
      10.
      Executive Compensation.





The
      following table sets forth the compensation awarded to, earned by or paid to
      Univec's Chief Executive Officer and each other executive officers of the
      Company whose salary and bonus for the two years ended December 31, 2005
      exceeded $100,000.




Annual
                Compensation
            
            Long-Term
                CompensationOther
                Annual
            
            SecuritiesName
                and Principal Position
            
            
            Year
            
            
            Salary
            
            
            Compensation
            
            
            Underlying
                OptionsDr.
                David Dalton
            
            
            2004
            
            $
            396,000(1
            )
            
            -
            
            
            0
                (1
            )Chief
                Executive Officer andPresident2005
            
            $
            435,600(2
            )
            
            -
            
            
            0
                (2
            )





(1)
      )
      During 2004, Dr. David Dalton earned a salary of $396,000, plus life, health
      and
      disability insurance, as well as an automobile lease and insurance allowance
      equal to $24,000 per year.





(2)
      During 2005, Dr. David Dalton earned a salary of $435,600, plus life, health
      and
      disability insurance, as well as an automobile lease and insurance allowance
      equal to $24,000 per year.




Employment
      Agreements





Dr.
      David
      Dalton provides the amount of time necessary to perform his corporate duties.
      Dr
      Dalton's salary was $435,600 for 2005, plus a bonus determined by the agreement
      of Dr. Dalton and the Compensation Committee. On each January 1, the base salary
      will be increased by an amount agreed upon by Dr. Dalton and the Compensation
      Committee. The agreement also provides Dr. Dalton with an option to purchase
      2,000,000 shares of Common Stock at an exercise price of $.24 per share, vesting
      500,000 shares on the first anniversary of the agreement, and an additional
      41,667 shares vesting each month following the initial vesting date. The
      unexpired term of the agreement will be extended automatically by one year
      on
      each January 1 following the date of the agreement, such that the unexpired
      term
      of the agreement will at all times not be less than two years following each
      extension. The agreement provides for payment by Univec of annual premiums
      on a
      term life insurance policy with a face amount of $2 million. The agreement
      also
      provides for health and disability benefits, as well as an automobile lease
      and
      insurance allowance equal to $24,000 per year. Under the terms of the agreement,
      Dr. Dalton is entitled to a severance payment equal to his highest annual base
      salary during the term for the remainder of the term if the agreement is
      terminated by Dr. Dalton for good reason, or in the event of a change in control
      of Univec.





Stock
      Options





The
      following table contains information concerning the grant of stock options
      to
      Dr. David Dalton ( the "Named Executive Officer") during the fiscal year ended
      December 31, 2005.





Number
                of Shares
            Percent
                of Total OptionsUnderlying
                Options
            Granted
                to Employees in
            Exercise
                Price
            ExpirationName
            Granted
            Fiscal
                Year
            Per
                Share
            DateDr.
                David Dalton
            -
            0%
            $0.00
            N/A







-15-





AGGREGATED
      OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR
      VALUES





The
      following table summarizes for Dr. Dalton the total number of shares acquired
      upon exercise of options during the year ended December 31, 2005, and the value
      realized (fair market value at the time of exercise less exercise price), the
      total number of unexercised options, if any, held at December 31, 2005, and
      the
      aggregate dollar value of in-the-money, unexercised options, held at December
      31, 2005. The value of the unexercised, in-the-money options at December 31,
      2005, is the difference between their exercise or base price, and the fair
      market value of the underlying Common Stock on December 31, 2005. The closing
      bid price of the Common Stock on December 31, 2005 was $0.02.




Shares
                Acquired Upon
            Number
                of Securities
            In-The-MoneyExercise
                of Options
            Underlying
                Unexercised
            Options
                atDuring
                Fiscal 2005
            Options
                at December 31, 2005
            December
                31, 2005Name
            Number
            Value
                Realized
            Exercisable
            Unexercisable
            Exercisable
            UnexercisableDr.
                David Dalton
            None
            None
            3,083,342
            416,658
            $
                -
            $
                -





Certain
      Transactions





At
      December 31, 2005, the following Deferred Payroll was payable to


executive
      officers and other employees:




David
                Dalton, Chief Executive Officer and President
            
            $
            1.291,600Raphael
                Langford, Chief Operating Officer
            
            
            205,169Michael
                Lesisko, Secretary - Treasurer
            
            
            181,4421,678,211Other
                employees
            
            
            200,272$
            1,878,483




At
      December 31, 2005, notes payable to companies owned by David Dalton, President,
      amounted to $815,510. These loans are the result of providing working capital
      to
      the Company.





At
      December 31, 2005, notes payable to David Dalton, President amounted to $100,000
      and notes payable to S. Robert Grass, Chairman of the Board of Directors
      amounted to $208,300. These amounts were advanced to the Company at terms and
      rates similar to commercial bank provisions. The funds were provided to the
      Company for working capital operating needs.





On
      January 20, 2005, the Series E preferred stockholder exchanged 30 preferred
      shares plus $2,187 accrued dividends for 804,688 shares of Common Stock at
      $0.040 per share On April 6, 2005 this Series E preferred stockholder exchanged
      70 preferred shares plus $5,843 accrued dividends for 1,386,527 shares of Common
      Stock at $0.0547 per share





On
      January 7, 2005, two executive officers exchanged a combined $52,879 of accrued
      payroll for 698,893 common shares at $0.075 per share. On March 13, 2006 an
      executive officer exchanged $29,892 of accrued payroll for 250,000 common shares
      at $0.120 per share These exchanges were authorized by the Company's Board
      of
      Directors on August 5, 2003.





On
      June
      30, 2005, the Company's Chief Executive Officer exchanged $42,441 of employment
      Contract benefits for 1,286,082 common shares. On October 12, 2004, the Chief
      Executive Officer exchanged an additional $12,868 of employment contract
      benefits for 1,169,850 common shares. These exchanges were authorized by the
      Company's Board of Directors on August 5, 2003







-16-







Item
      11.
      Security Ownership of Certain Beneficial Owners and Management





The
      following table sets forth certain information concerning the beneficial
      ownership of the Common Stock as of December 31, 2005 by (i) each stockholder
      known by the Company to be a beneficial owner of more than five percent of
      the
      outstanding Common Stock, (ii) each director of the Company and each Named
      Executive Officer and (iii) all directors and officers as a group.





Amount
                and Nature of Beneficial
            Percentage
                of common Stock BeneficiallyName
            Ownership
                (1)
            Owned
                (2)David
                Dalton (4)
            24,816,320
                (5)
            40.82%
                (6)S.
                Robert Grass (4)
            1,065,951
                (9)
            1.83%
                (10)William
                Wooldridge (4)
            250,000
                (13)
            0.43%
                (14)Raphael
                Langford (4)
            3,366,667
                (7)
            5.73%
                (8)Michael
                Lesisko (4)
            2,640,668
                (11)
            4.49%
                (12)All
                directors and executiveofficers
                as a group (5 persons)
            32,139,606
                (3)(16)
            50.29%
                (17)Emerald
                Capital Partners LP
            6,000,000
            10.41%
                (15)





(1)
      Unless otherwise indicated, each person has sole investment and voting power
      with respect to the shares indicated, subject to community property laws, where
      applicable. For purposes of computing the percentage of outstanding shares
      held
      by each person or group of persons named above as of December 31, 2005 any
      security which such person or group of persons has the right to acquire within
      60 days after such date is deemed to be outstanding for the purpose of computing
      the percentage ownership for such person or persons, but is not deemed to be
      outstanding for the purpose of computing the percentage ownership of any other
      person.





(2)
      Except as otherwise stated, calculated on the basis of 57,634,282 shares of Common
      Stock issued and outstanding on December 31, 2005.





(3)
      For
      purposes of this calculation, shares of Common Stock beneficially owned by
      more
      than one person have only been included once.





(4)
Address
      is c/o the Company, 822 Guilford Avenue, Suite 208, Baltimore,Maryland
      21202.





(5)
      Includes 3,166,676 shares issuable upon exercise of presently exercisable options.





(6)
      Calculated on the basis of 60,800,958 shares of Common Stock issued and outstanding.




(7)
      Includes 1,133,333 shares issuable upon exercise of presently exercisable options.





(8)
      Calculated on the basis of 58,767,615 shares of Common Stock issued and outstanding.





(9)
      Includes 312,501 shares issuable upon conversion of Series D Preferred Stock
      and
      250,000 issuable upon exercise of presently exercisable options.





(10)
      Calculated on the basis of 58,196,783 shares of Common Stock issued and outstanding.





(11)
      Includes 1,166,667 shares issuable upon exercise of presently exercisable options.





(12)
      Calculated on the basis of 58,800,949 shares of Common Stock issued and outstanding.





(13)
      Includes 250,000 shares issuable upon exercise of presently exercisable options.





(14)
      Calculated on the basis of 57,884,282 shares of Common Stock issued and outstanding.





(15)
      Calculated on the basis of 57,634,282 shares of Common Stock issued and outstanding.






-17-





(16)
      Includes 6,279,177 shares issuable upon exercise of presently exercisable options.





(17)
      Calculated on the basis of 57,634,282 shares of Common Stock issued and outstanding.








Item
      12.
      Certain Relationships and Related Transactions





During
      2003, Univec received a line of credit from Dr. David Dalton, President and
      Chief Executive Officer, and S. Robert Grass, Chairman of the Board of prime
      plus 2%, per annum. This line of credit was issued under the same terms as
      an
      underlying line of credit which Dr, Dalton and Mr. Grass received from a
      commercial bank. As of December 31, 2005, the outstanding balance of this loan
      was $200,000.





During
      February 2004, Univec borrowed $50,000 from Mr. S. Robert Grass, Chairman of
      the
      Board of Directors, repayable on demand at prime plus 2%, per
      annum.





During
      the years ended December 31, 2005 and 2004, Univec has borrowed an aggregate
      of
      $873,904 from Pharmacy Services, Inc., Health Resources, Inc. and other
      companies all owned by Dr. David Dalton, President and Chief Executive Officer.
      These loans are repayable on demand at 10%, per annum. At December 31,2005
      and
      2004, the aggregate balance outstanding was $815,510 and $578,800,
      respectively.




During
        2005, Pharmacy Services, Inc., a company owned by Dr. David Dalton, President
        and Chief Executive Officer, purchased goods which generated net revenue of
        $40,605 from PPSI's GPO (such goods had a cost of revenue of $9,895,436). This
        transaction represented 50% of total revenue.





PPSI
      shares office space and other administrative expenses with affiliated companies
      owned by Dr. David Dalton, the Chief Executive Officer of Univec. These expenses
      have not been allocated between the companies, but PPSI's portion would be
      insignificant.





______________________________________________________________________________________________________________


Item
      l3.
      Exhibits and Reports on Form 8-K.





A
      Form
      8-K was filed on July 31, 2006, reporting the completion of a private placement
      of a $2,000,000 6% Note and Warrants Securities Purchase Agreement. The
      agreement allows the investor to purchase 10,000,000 common stock warrants
      for
      seven years at an exercise price of $0.02 each. The Note and Warrants were
      issued in reliance upon exemptions from registration pursuant to Section 4(2)
      of
      the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereto.
      Each of the Investors is an accredited investor as defined in Rule 501 of
      Regulation D under the Securities Act of 1933.





(a)
      Exhibits





Exhibit  Description







2.1(1)
      Stock Purchase Agreement and Plan of Reorganization made and
      entered


into
      as
      of December 31, 2001, by and among Physician and Pharmaceutical


Services,
      Inc. ("PPSI"), the stockholder of PPSI and the Registrant.





2.2(2)
      Stock Purchase Agreement made and entered into as of February 28,
      2002,


by
      and
      among Thermal Waste Technologies, Inc. ("TWT"), the stockholders of
      TWT


and
      the
      Registrant.





3.1(4)
      Restated Certificate of Incorporation of the Registrant, as
      amended.





3.2(3)
      By-laws of the Registrant, as amended. 4.1(3) Agreement and Plan of


Merger
      dated as of October 7, 1996 between the Registrant and UNIVEC,


Inc.,
      a
      New York corporation.




4.3(3)
      Form of warrant between the Registrant and the underwriters of the


Registrant's
      initial public offering.





4.4(3)
      Specimen Common Stock Certificate.





4.5(3)
      Specimen Warrant Certificate (included as Exhibit A to Exhibit 4.3


herein).





4.6(3)
      Registration Rights Agreement among Registrant and the holders


of
      bridge
      warrants.





4.7(5)
      Certificate of Designation of Series B Preferred Stock. 4.8(6)


Certificate
      of Amendment of Certificate of Designation of Series B


Preferred
      Stock.





4.9(5)
      Form of Warrant Agreement dated July 27, 1998, between Company and


selling
      security-holder.





4.10(6)
      Form of Amended and Restated Warrant Agreement, amending and
      restating


the
      Warrant Agreement dated July 27, 1998, between the Company and the


selling
      security-holder.






-18-





4.11(5)
      Registration Rights Agreement dated July 27, 1998, between the


Company'
      and selling security-holder.





4.12(6)
      Registration Rights Agreement, dated February 8, 1999, between the


Company
      and the selling security-holder.





4.13(6)
      Certificate of Designation of Series C Preferred Stock. 4.14(6)
      Form


of
      Warrant Agreement dated February 8, 1999. between the Company


and
      selling security-holder.





10.1(3)
      Amended 1996 Stock Option Plan of the Registrant.





10.2(7)
      1998 Stock Option Plan of the Registrant.





10.3(8)
      2000 Stock Option Plan of the Registrant.





10.4(7)
      Employment Agreement dated as of September 4, 1998 between the


Registrant
      and Joel Schoenfeld.





10.5(9)
      Patent License Agreement dated August 16, 2000 by and between the


Company
      and Terumo Europe, NV.





10.6(9)
      Manufacturing Agreement dated August 16, 2000, by and between the


Company
      and Terumo, N.V.





10.7(9)
      Equipment Purchase Agreement dated August 16, 2000, by and between


the
      Company and Terumo Europe, N.V.





10.10(9)
      Employment Agreement dated as of January 1, 2002, between the


Registrant
      and David L. Dalton.





10.11
      Employment Agreement dated as of December 31, 2001, between the


Registrant
      and Joel Schoenfeld.





21.1(3)
      List of Subsidiaries.





31.1(10)
      Statement of the Chief Executive Officer pursuant to Section 302 of
      the


Sarbanes-Oxley
      Act of 2002.




31.2(10)
      Statement of the Chief Financial Officer pursuant to Section 302 of the


Sarbanes-Oxley
      Act of 2002.




32.1(10)
      Statement of the Chief Executive Officer pursuant to
      18 U.S.C. Section


1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.




32.2(10)
      Statement of the Chief Financial Officer pursuant to
      18 U.S.C. Section


1350,
      as adopted pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002.





(1)
      Incorporated by reference to the Registrant's Form 8K filed January


4,
      2002.





(2)
      Incorporated by reference to the Registrant's Form 8K filed March
      11,


2002.





(3)
      Incorporated by reference to the Registrant's Form 8K filed February
      10,


2005.





(4)
      Incorporated by reference to the Registrant's Form 8K filed June
      13,


2005.





(5)
      Incorporated by reference to the Registrant's Form 8K/A Amendment 2


filed
      January 11, 2006.





(6)
      Incorporated by reference from the Registrant's Registration


Statement
      on Form SB-2 (File No. 333-20187) declared effective on


April
      24,
      1997.




(7)
      Incorporated by reference from the Registrant's Periodic Quarterly


Report
      on
      Form 10-QSB for the fiscal quarter ended September 30,


2000.





(8)
      Incorporated by reference from the Registrant's Registration


Statement
      on Form S-3 (File No. 333-62261) declared effective


December
      11, 1999.





(9)
      Incorporated by reference from Amendment No. 2 to the Registrant's


Registration
      Statement Form 10-S-3 (File 333-74199).





(10)
      Incorporated by reference to the Registrant's Annual Report on Form


10-KSB
      for the year ended December 31, 1998 (File No. 0-22413).





(11)
      Incorporated by reference from the Registrant's Post-Effective


Amendment
      No 1 on Form S-2 to Form S-3 (File No. 333-74199) declared


effective
      on January 26, 2001.





(12)
      Incorporated by reference to the Registrant's Annual Report on Form


10-KSB
      for the year ended December 31, 2000 (File No. 0-22413).





(13)
      Filed herewith.





(b)
      Reports on Form 8-K filed during the fourth quarter 2005.





No
      Forms
      8-K were filed during the fourth quarter 2005.






-19-





Item
      14.
      Principal Accountant Fees and Services.





The
      following table presents the cost of Univec's principal accountants' fees and
      services for the years ended December 31, 2005 and 2004,
      respectively:





2005
            
            2004Audit
                fees
            
            $
            153,240
            
            $
            110,261Audit
                related fees
            
            
            -
            
            
            -Tax
                fees
            
            
            -
            
            
            18,750All
                other fees
            
            
            -
            
            
            -Total
            
            $
            153,240
            
            $
            129,011





Univec's
      Audit Committee pre-approves the engagement of the principalaccountant and
      the
      estimated audit fee, by each category.





SIGNATURES





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant caused this report to be signed on its behalf by theundersigned,
      thereunto duly authorized.





Dated:
      **September 13, 2006**





UNIVEC,
      INC.





By: s/
      Dr.
      David Dalton


Dr.
      David
      Dalton


Chief
      Executive Officer


(Principal
      Executive Officer)








In
      accordance with the Securities Exchange Act of 1934, this report has been signed
      below by the following persons on behalf of the Registrant
      on **September 13, 2006** in the capacities
      indicated.






**UNIVEC,
              INC.**Date: September
              13, 2006
            By:
            /s/ Dr.
              David
              DaltonChief
                Executive Officer and a Director
              (Principal
                Executive Officer) Date: September
              13, 2006
            By:
            /s/ Michael
              LesiskoChief
              Financial Officer, Treasurer, Secretary Date: September
              13, 2006
            By:
            /s/ S.
              Robert
              GrassChairman
              and a Director Date: September
              13, 2006
            By:
            /s/ William
              WooldridgeDirector







-20-





UNIVEC,
      INC. AND SUBSIDIARIES


CONSOLIDATED
      FINANCIAL STATEMENTS


DECEMBER
      31, 2005 AND FOR THE TWO YEARS THEN ENDED





Index
      to
      Consolidated Financial Statements








PageReport
                of Independent Registered Public Accounting Firm
            F--2Consolidated
                Balance Sheet - December 31, 2005
            F--3Consolidated
                Statements of Operations - years
                endedDecember
                31, 2005 and 2004
            F--4Consolidated
                Statements of Stockholders' Equity -
                yearsended
                December 31, 2005 and 2004
            F--5Consolidated
                Statements of Cash Flows - years
                endedDecember
                31, 2005 and 2004
            F--6Notes
                to Consolidated Financial Statements
            F--7














-21-






**Report
      of Independent Registered Public Accounting
      Firm**







To
      the
      Board of Directors and


Stockholders
      of Univec, Inc.




We
      have
      audited the accompanying consolidated balance sheet of Univec, Inc. and
      Subsidiaries as of December 31, 2005 and
      2004
      and the related consolidated statements of operations, stockholders'
      equity and cash flows for each of the years in the two-year period ended
      December 31, 2005. These consolidated financial statements are the
      responsibility of the Company's management.  Our responsibility is to
      express an opinion on these consolidated financial statements based on our
      audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. The company
      is not required to have, nor were we engaged to perform, an audit of its
      internal control over financial reporting. Our audit included consideration
      of
      internal control over financial reporting as a basis for designing audit
      procedures that are appropriate in the circumstances, but not for the purpose
      of
      expressing an opinion on the effectiveness of the company’s internal control
      over financial reporting. An audit also includes examining, on a test basis,
      evidence supporting the amounts and disclosures in the consolidated financial
      statements, assessing the accounting principles used and significant estimates
      made by management, as well as evaluating the overall consolidated financial
      statement presentation. We believe that our audits provide a reasonable basis
      for our opinion.




In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the consolidated financial position of Univec,
        Inc.
        and Subsidiaries as of December 31, 2005 and 2004 and the consolidated results
        of their operations and their consolidated cash flows for each of the years
        in
        the two-year period ended December 31, 2005 in conformity with accounting
        principles generally accepted in the United States of America.
 
 The
        accompanying consolidated financial statements have been prepared assuming
        that
        the Company will continue as a going concern. As discussed in Note 2 to the
        consolidated financial statements, the Company has suffered from recurring
        losses from operations, has negative working capital and has a total
        stockholders’ deficit, all of which raise substantial doubt about its ability to
        continue as a going concern. Management’s plans in regard to these matters are
        also discussed in Note 2.  The consolidated financial statements do not
        include any adjustments that might result from the outcome of this
        uncertainty.




By:
            /s/ Abrams,
              Foster, Nole & Williams, P.A.Baltimore,
                Maryland
              September
                8, 2006
            Abrams,
                Foster, Nole & Williams, P.A.Title


F-2




**Univec,
                  Inc. and Subsidiaries**
              ****
              ****
              ****
              ******Consolidated
                  Balance Sheet**
              ****
              ****
              ****
              ******December
                  31, 2005**ASSETSCash
              
              $
              991Accounts
                  receivable
              
              
              174,864Inventories
              
              
              193,325Total
                  current assets
              
              
              369,180Fixed
                  assets, net
              
              
              520,092Other
                  assets
              
              
              64,638Total
                  assets
              
              $
              953,910LIABILITIES
                  AND STOCKHOLDERS' DEFICITAccounts
                  payable and accrued expenses
              
              $
              1,598,524Deferred
                  payroll
              
              
              1,878,483Notes
                  and loans payable - current
              
              
              890,438Loans
                  payable - officers/directors - current
              
              
              258,300Due
                  to affiliated companies
              
              
              815,510Total
                  current liabilities
              
              
              5,441,255Notes
                  and loans payable - long-term
              
              
              318,183Loans
                  payable - officers/directors - long term
              
              
              50,000Total
                  liabilities
              
              
              5,809,438Commitments
                  and contingencies (Notes 3, 4, 12 and 13)STOCKHOLDERS'
                  DEFICITPreferred
                  stock $.001 par value; 3,743,500 sharesauthorized;
                  none
                  issued and outstandingSeries
                  D 5% cumulative convertible preferred stock,$.001
                  par value;
                  authorized: 1,250,000; issued andoutstanding:
                  208,333 shares (aggregate liquidationvalue:
                  $554,272)
              
              
              208Series
                  E cumulative convertible preferred stock,$.001
                  par value;
                  authorized: 2,000 shares; issued andoutstanding:
                  312
                  shares (aggregate liquidationvalue:
                  $350,747)
              
              
              1Common
                  stock $.001 par value; authorized: 75,000,000 shares;
              
              
              57,634issued:
                  57,634,282
                  and outstanding: 57,230,128 sharesAdditional
                  paid-in capital
              
              
              11,514,390Treasury
                  stock, 404,154 shares - at cost
              
              
              (28,291
              )Accumulated
                  deficit
              
              
              (16,399,470
              )Total
                  stockholders' deficit
              
              
              (4,855,528
              )Total
                  liabilities and stockholders' deficit
              
              $
              953,910See
                  notes to consolidated financial statements.





F-3




**Univec,
        Inc. and Subsidiaries**
 **Consolidated
        Statement of Operations**
 **Years
        ended December 31, 2005 and 2004**
 2005
              
              
              2004Revenues
                  (Note 4)
              
              $
              81,398
              
              $
              327,827Cost
                  of revenues
              
              
              13,836
              
              
              128,933Gross
                  Margin
              
              
              67,562
              
              
              198,894Operating
                  ExpensesMarketing
                  and
                  selling
              
              
              233,990
              
              
              123,400Product
                  development
              
              
              3,802
              
              
              28,871General
                  and
                  administrative
              
              
              1,518,840
              
              
              1,772,2461,756,632
              
              
              1,924,517Loss
                  from Operations
              
              
              (1,689,070
              )
              
              (1,725,623
              )Other
                  Income (Expense)Interest
                  expense,
                  net
              
              
              (200,019
              )
              
              (108,092
              )Gain
                  on
                  extinguishments of debt
              
              
              -
              
              
              144,819Loss
                  on write-off
                  of goodwill
              
              
              -
              
              
              (1,774,119
              )Other
                  income
              
              
              -
              
              
              47,795Total
                  other expenses
              
              
              (200,019
              )
              
              (1,689,597
              )Loss
                  from continuing operations
              
              
              (1,889,089
              )
              
              (3,415,220
              )Loss
                  from discontinued operations
                
                Loss
                  on sale of subsidiary
              
              
              -
                
                -
              
              
              (8,260)
                
                (597,056
              )Net
                  loss
              
              
              (1,889,089
              )
              
              (4,020,536
              )Dividends
                  attributable to preferred stock
              
              
              (34,844
              )
              
              (35,921
              )Loss
                  attributable to common stockholders
              
              $
              (1,923,933
              )
              $
              (4,056,457
              )Share
                  informationBasic
                  net loss per
                  common share
              
              $
              (0.04
              )
              $
              (0.11
              )Basic
                  weighted average numberof
                  common shares outstanding
              
              
              52,729,533
              
              
              38,510,467See
                  notes to consolidated financial statements.




F-4


**Univec,
          Inc. and Subsidiaries**
 **Consolidated
          Statement of Stockholders'Equity** **Years
            ended December 31, 2005 and 2004**
  Additional
                
                
                
                
                
                
                
                
                Prepaid
                
                
                
                
                
                TotalSeries
                    D Preferred
                
                
                Series
                    E Preferred
                
                
                Common
                    Stock
                
                
                Paid-in
                
                
                Treasury
                    Stock
                
                
                Consulting
                
                
                Accumulated
                
                
                Stockholders'Shares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Shares
                
                
                Amount
                
                
                Capital
                
                
                Shares
                
                
                Amount
                
                
                Services
                
                
                Deficit
                
                
                EquityBalance,
                    January 1, 2004
                
                
                104,167
                
                $
                104
                
                
                492
                
                $
                1
                
                
                35,168,476
                
                $
                35,169
                
                $
                10,506,007
                
                
                
                
                
                
                
                
                
                
                
                ($10,478,646
                )
                $
                62,635Sale
                    of Series D
                
                
                20,833
                
                
                21
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                49,979
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                50,000Common
                    stock issued for:CashConsulting
                    fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                6,000,000
                
                
                6,000
                
                
                234,000
                
                
                
                
                
                
                
                
                ($240,000
                )Deferred
                    payroll
                    and accruedexpenses
                    -
                    officers
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,160,035
                
                
                2,160
                
                
                173,102
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                175,262Loans
                    payable -
                    officers/directors
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                500,000
                
                
                500
                
                
                9,500
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                10,000Sale
                    of
                    subsidiary
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,829
                
                
                404,154
                
                
                ($28,291
                )
                
                
                
                
                
                
                
                (25,462
                )Convert
                    Series E
                    and dividends
                
                
                
                
                
                
                
                
                (80
                )
                
                
                
                
                1,790,341
                
                
                1,790
                
                
                (1,790
                )
                
                
                
                
                
                
                
                
                
                
                (3,168
                )
                
                (3,168
                )Amortization
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                30,000
                
                
                
                
                
                30,000Options
                    issued
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,000
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                4,000Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (4,020,536
                )
                
                (4,020,536
                )Balance,
                    December 31, 2004
                
                
                125,000
                
                
                125
                
                
                412
                
                
                1
                
                
                45,618,852
                
                
                45,619
                
                
                10,977,627
                
                
                404,154
                
                
                (28,291
                )
                
                (210,000
                )
                
                (14,502,350
                )
                
                (3,717,269
                )Sale
                    of Series D
                
                
                83,333
                
                
                83
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                199,917
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                200,000Common
                    stock issued
                    for:Cash
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                350,000
                
                
                350
                
                
                34,650
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                35,000Consulting
                    fees
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                1,500,000
                
                
                1,500
                
                
                43,500
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                45,000Deferred
                    payroll
                    and accruedexpenses
                    -
                    officers
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                5,640,882
                
                
                5,641
                
                
                185,189
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                190,830Loans
                    payable -
                    affiliates
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,333,333
                
                
                2,333
                
                
                67,667
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                70,000Loans
                    payable -
                    officers/directorsConvert
                    Series E
                    and dividends
                
                
                
                
                
                
                
                
                (100
                )
                
                
                
                
                2,191,215
                
                
                2,191
                
                
                5,840
                
                
                
                
                
                
                
                
                
                
                
                (8,031
                )
                
                0Amortization
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                210,000
                
                
                
                
                
                210,000Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,889,089
                )
                
                (1,889,089
                )Balance,
                    December 31, 2005
                
                
                208,333
                
                $
                208
                
                
                312
                
                $
                1
                
                
                57,634,282
                
                $
                57,634
                
                $
                11,514,390
                
                $
                404,154
                
                
                ($28,291
                )
                $
                0
                
                
                ($16,399,470
                )
                
                ($4,855,528
                )
   F-5
   **Univec,
          Inc. and Subsidiaries**
 **Consolidated
          Statement of CashFlows**
 **Years
          ended December 31, 2005 and 2004**
  2005
                
                
                2004Cash
                    flows from operating activitiesNet
                    loss
                
                $
                (1,889,089
                )
                $
                (4,020,536
                )Adjustments
                    to reconcile net loss to net cashused
                    in operating
                    activitiesLoss
                    on write-off
                    of goodwill
                
                
                -
                
                
                1,774,119Loss
                    on sale of
                    subsidiary
                
                
                -
                
                
                481,719Depreciation
                    and
                    amortization
                
                
                342,122
                
                
                189,008Write-off
                    of
                    equipment
                
                
                -
                
                
                57,295Valuation
                    allowance
                    for inventories
                
                
                -
                
                
                75,000Stock
                    based
                    compensation
                
                
                -
                
                
                4,000Loss
                    on
                    cancellation of capital lease
                
                
                -
                
                
                (2,894
                )Gain
                    on
                    extinguishment of debt
                
                
                -
                
                
                (98,547
                )Gain
                    on receipt of
                    marketable securities
                
                
                36,349
                
                
                (36,349
                )Other
                
                
                -
                
                
                (11,435
                )Changes
                    in assets and liabilities, net ofeffects
                    from sale
                    of subsidiary -TWTAccounts
                    receivable
                
                
                3,098,629
                
                
                (506,983
                )Inventories
                
                
                (13,447
                )
                
                17,698Other
                    current
                    assets and other assets
                
                
                45,431
                
                
                (3,320
                )Accounts
                    payable
                    and accrued expenses
                
                
                (2,629,243
                )
                
                713,610Deferred
                    payroll
                
                
                689,766
                
                
                619,631Net
                    cash used in
                    operating activities
                
                
                (319,482
                )
                
                (747,984
                )Cash
                    flows from investing activitiesPurchases
                    of fixed
                    assets
                
                
                (13,500
                )
                
                (397,068
                )(Increase)
                    decrease
                    in restricted cash
                
                
                340,407
                
                
                (340,407
                )Cash
                    used in sale
                    of subsidiary (net of notes andother
                    payables of
                    $103,600)
                
                
                -
                
                
                (5,670
                )Net
                    cash used in
                    investing activities
                
                
                326,907
                
                
                (743,145
                )Cash
                    flows from financing activitiesProceeds
                    from notes
                    and loans payable,net
                    of expenses of
                    $80,146 in 2004
                
                
                -
                
                
                1,104,343Increase
                    in due
                    from affiliated companies
                
                
                306,710
                
                
                567,194Increase
                    in loans
                    payable - officers/directors
                
                
                55,000
                
                
                54,000Proceeds
                    from sale
                    of common stock
                
                
                35,000
                
                
                -Proceeds
                    from sale
                    of preferred stock
                
                
                50,000
                
                
                50,000Payments
                    on notes
                    and loans payable
                
                
                (482,587
                )
                
                (242,386
                )Payments
                    of
                    capitalized lease obligations
                
                
                -
                
                
                (21,232
                )Dividends
                    converted
                    to preferred stock
                
                
                -
                
                
                (3,168
                )Net
                    cash provided
                    by financing activities
                
                
                (35,877
                )
                
                1,508,751Net
                    increase (decrease) in cash
                
                
                (28,452
                )
                
                17,622Cash,
                    beginning of period
                
                
                29,443
                
                
                11,821Cash,
                    end of period
                
                $
                991
                
                $
                29,443Supplemental
                    disclosure of cash flow informationCash
                    paid for
                    interest
                
                $
                87,667
                
                $
                48,709Supplemental
                    disclosures of noncash activityCommon
                    stock issued
                    in payment ofloans
                    payable -
                    officers/directors
                
                $
                0
                
                $
                10,000Common
                    stock and options issued in payment
                
                $
                262,837
                
                
                179,262of
                    deferred payroll
                    and accrued expensesConversions
                    of Series E to common stock,including
                    dividends
                
                $
                8,031
                
                $
                3,168Treasury
                    stock received, net of options issued,on
                    sale of
                    subsidiary
                
                $
                0
                
                
                (125,462
                )See
                    notes to consolidated financial statements.
 F-6


Notes
      to Consolidated Financial Statements





1.
      Nature
      of Operations





Univec,
      Inc. (Company) produces, licenses and markets medical products, primarily
      syringes, on a global basis. Physician and Pharmaceutical Services, Inc. (PPSI),
      a subsidiary, provides pharmaceutical sample and group purchasing (GPO) services
      of pharmaceutical products. Thermal Waste Technologies, Inc. (TWT), a subsidiary
      until its sale, marketed a medical waste disposal unit.





2.
      Going
      Concern




The
        accompanying financial statements have been prepared on a going concern basis,
        which contemplates
        the realization of assets and the satisfaction of liabilities in the normal
        course of business.
        As of December 31, 2005, the Company had negative working capital of $5,072,075 and
        stockholders' deficit of $(4,855,528) and incurred net losses of $(1,889,089)
        and $(4,020,536)
        for the years ended December 31, 2005 and 2004, respectively. These factors,
        among others,
        indicate that the Company's continuation
        as a going  concern is dependent upon its ability to obtain adequate
        financing and/or
        achieve profitable operations. The financial statements do not include any
        adjustments related
        to the recoverability and classification of recorded asset amounts or the
        amounts and classification
        of liabilities that might be necessary should the Company be unable to
        continue
 in
        existence.


Management
      is currently seeking additional investment capital to support its entrance
      into


new
      business ventures and provide the capital needed to operate.





3.
      Significant Accounting Policies





Basis
      of
      Presentation





The
      consolidated financial statements include all the accounts of the Company and
      its wholly-owned subsidiaries, Physician and Pharmaceutical Services, Inc.
      (PPSI), Thermal Waste Technologies, Inc. (TWT), until its sale and Rx Ultra,
      Inc. (inactive). All material inter-company balances and transactions have
      been
      eliminated. The consolidated financial statements include all the accounts
      of
      Thermal Waste Technologies, Inc. until its sale





Accounts
      Receivable





Accounts
      receivable consisted of receivables from customers. The Company records a
      provision for doubtful receivables, if necessary, to allow for any amounts
      which
      may be unrecoverable and is based upon an analysis of the Company's prior
      collection experience, customer creditworthiness, and current economic trends.
      As of December 31, 2005, no allowance was necessary.





Inventories





Inventories
      are valued at the lower of cost, determined by the first-in, first-out method,
      or market.







F-7




Fixed
      Assets





Fixed
      assets are stated at cost, less accumulated depreciation, and are depreciated
      on
      a straight-line basis over the estimated useful lives of seven years.
      Maintenance and repairs are charged to expense as incurred; renewals and
      improvements which extend the life of assets are capitalized. Upon retirement
      or
      disposal, the asset cost and related accumulated depreciation and amortization
      are eliminated from the respective accounts and the resulting gain or loss,
      if
      any, is included in the results of operations.





The
      carrying value of fixed assets is evaluated whenever changes in circumstances
      indicate the carrying amount of such assets may not be recoverable. If
      necessary, the Company recognizes an impairment loss for the difference between
      the carrying amount of the assets and their estimated fair value. Fair value
      is
      based on current and anticipated future undiscounted cash flows.





Shipping
      Income and Expense





Shipping
      income is included in product sales. Shipping expenses are included


in
      marketing and selling.




Product
      Development





Research
      and development costs have been expensed as incurred.





Basic
      Loss per Share





Basic
      net
      loss per common share was computed based on the weighted average number of
      common shares outstanding during the year. Dilutive net loss per share has
      not
      been presented as they are anti-dilutive.





Revenue
      Recognition


The
        Company utilizes the professional standards defined by Emerging Issues Task
        Force (EITF) statement 99-19 to define whether it should follow the “gross” or
        the “net” method of recognizing the amount of revenue earned from various
        activities. As a result of the differing circumstances related to the Company’s
        manufacture, procurement, distribution and physician sampling programs diverse
        financial accounting methods are used to recognize revenue from its various
        revenue sources. The Company’s manufacturing and specialty pharmaceutical drug
        distribution programs employ the “gross” method of recognizing revenue. However,
        because of the distinctive type of services provided to customers, the GPO
        and
        physician sampling programs utilize the “net” method of revenue recognition.


Product
      sales are recognized when products are shipped. Although the Company warrants
      its products, it is unable to estimate the future costs relating to warranty
      expense and, as such, recognizes warranty expenses as incurred. Revenues for
      PPSI's group purchasing (GPO)service are recognized when the products are
      shipped.




Distributor
      Arrangements





The
      Company markets its syringe products exclusively through distributors and
      various government agencies. Accounts receivable balances are payable within
      thirty days of shipment. Univec provides a product quality warranty on its
      products. The Company has never had any of its products returned due to product
      deficiencies. The products are priced under competitive arrangements with each
      customer. The product revenue recognition is based upon the prices charged
      to
      each customer. The Company has no price concessions which allow payments below
      the agreed prices.





Product
      Warranties





The
      Company provides a product warranty for the products sold. However, the Company
      has never had a product returned due to defective quality. Further, there are
      no
      warranty costs recognized in the years ended December 31, 2005 and 2004. The
      Company believes that because no warranty costs were incurred during any of
      the
      periods mentioned, there is no need to disclose any additional warranty cost
      policy or amounts.





Stock
      Based Compensation





Compensation
      cost for stock, stock options, warrants, etc., issued to employees and
      non-employees is based on the fair value method.





Income
      Taxes





Deferred
      income taxes have been provided for temporary differences between financial
      statement and income tax reporting under the liability method , using expected
      tax rates and laws that are expected to be in effect when the differences are
      expected to reverse. A valuation allowance is provided when it is more likely
      than not , that the deferred tax assets will not be realized.





Estimates





The
      preparation of financial statements in conformity with generally accepted
      accounting principles requires management to make estimates and assumptions
      that
      affect the reported amounts of assets and liabilities and disclosure of
      contingent assets and liabilities at the date of the financial statements and
      the reported amounts of revenues and expenses during the reporting period.
      Actual results could differ from those estimates.





Fair
      Values





The
      carrying amounts of cash, accounts receivable, accounts payable and accrued
      expenses, notes and loans payable and deferred payroll approximate their fair
      values.





F-8







New
      Accounting Pronouncements





Financial
      Accounting Standards Board Statement # 123R, Stock Based Compensation, effective
      for the year ended December 31, 2006, has not been analyzed to determine if
      it
      will have a material effect on the Company’s financial statements.





Management
      does not believe that any other recently issued, but not yet effective
      accounting pronouncements, if adopted, would have a material effect on the
      accompanying financial statements.




4.
      Concentrations





Cash


From
      time
      to time, the Company maintains cash in financial institutions in excess of
      insured limits. In assessing its risk, the Company's policy is to maintain
      funds
      only with reputable financial institutions.




Revenue
      Recognition





As
      a
      result of the differing circumstances related to the Company’s manufacture,
      procurement, distribution and physician sampling programs, diverse financial
      accounting methods are utilized to recognize the revenue from its various
      financial sources.




The
        Company utilizes the “gross” sales method of recognizing the amount of revenue
        from its syringe manufacturing and specialty pharmaceutical drug product
        sales.
        This method is influenced by several factors as defined by EITF 99-19, which
        the
        Company’s manufacturing and specialty pharmaceutical drug product sales market
        agreements indicate to be in accordance with the gross sales method. The
        most
        significant factor under these agreements include the Company’s retention of the
        inventory’s risk of loss for these products.


The
      GPO
      and physician sampling programs use the “net” method of revenue recognition.
      However, the Company rather than the supplier is the primary credit obligor
      in
      these arrangements.





The
      details of the Company’s total revenue, payments for revenue, cost of goods sold
      and gross margin are as follows:





Description
            
            
            First
                Quarter
            
            
            Second
                Quarter
            
            
            Third
                Quarter
            
            
            Fourth
                Quarter
            
            
            Year
                End Dec. 31
            
            
            Year
                End Dec. 312005
            
            
            2005
            
            
            2005
            
            
            2005
            
            
            2005
            
            
            2004Total
                revenue
            
            $
            4,446,867
            
            $
            4,553,704
            
            $
            501,853
            
            
            474,410
            
            $
            9,976,834
            
            $
            19,448,388Payments
                for revenue
            
            
            (4,406,856
            )
            
            (4,508,648
            )
            
            (508,536
            )
            
            (
                471,396
            )
            
            (
                9,895,436
            )
            
            (19,120,561
            )Net
                revenue
            
            
            40,011
            
            
            45,056
            
            
            (6,683
            )
            
            3,014
            
            
            81,398
            
            
            327,827Cost
                of goods sold
            
            
            (14,946
            )
            
            (
                8,201
            )
            
            135
            
            
            9,176
            
            
            (13,836
            )
            
            (128,933
            )Gross
                margin
            
            $
            25,065
            
            $
            36,855
            
            $
            (6,548
            )
            $
            12,190
            
            $
            67,562
            
            $
            198,894




Purchases


During
      both 2005 and 2004, t he
      Company purchased 99% of its pharmaceutical drugs for its group purchasing
      service (GPO) from one non-related vendor. The arrangement requires the Company
      to pay for the drugs within forty five days after the respective period
      month-end. As
      of
      December 31, 2005, accounts payable to that one vendor were 2% of total accounts
      payable.





5.
      Marketable Securities





As
      of
      December 31, 2004, marketable securities consisted of an investment in an equity
      security, with a fair market value of $36,349. Management classified the
      investment as available-for-sale. The Company received this security in December
      2004 upon the conversion from a mutual to a stock insurance company in which
      Univec had owned a policy.





In
      January 2005, the security was sold for $36,101.




6.
      Inventories





Inventories
      consisted of the following:




Raw
                materials
            
            $
            203,190Work-in-process
            
            
            89,641Finished
                goods
            
            
            25,494318,325Less:
                allowance for valuation
            
            
            (125,000
            )$
            193,325





The
      Company provided a $0 and $75,000 valuation allowance in 2005 and
      2004,
      respectively.





7.
      Fixed
      Assets





Fixed
      assets consisted of the following:




Equipment
            
            $
            1,114,284Less:
                accumulated depreciation
            
            
            594,192$
            520,092




As
      of
      December 31, 2004, the Company wrote-off fixed assets located at former
      suppliers with
      a
      cost of $371,764 and a net book value of $85,088.





Depreciation
      expense was $116,093 and $128,901 in 2005 and 2004, respectively. For the year ended
      December 31, 2005, fully depreciated assets were approximately
      $180,000.





F-9




8.
      Notes
      and Loans Payable





As
      of
      December 31, 2005, notes and loans payable consisted of:




Loan
                  due to a shareholder through July, 2009,with interest at prime plus 2% (1)
              $
                  500,000Loans
                  payable to agencies for economicdevelopment payable at $4,615 per month untilJuly 2009, with interest at 4% per annum (1)
              97,321Loan
                  payable to a vendor without specificpayment terms or interest (2)
              211,852Loan
                  payable to a vendor without specific interest
              135,000Loan
                  payable to a vendor due April 30, 2007with interest at prime plus 2% per annum
              78,151Notes
                  payable with interest at 8%
              85,000Notes
                  payable with interest at 12%,per annum
              55,000Notes
                  payable to a shareholder's trusts, with interestat 12%, per annum (2)
              27,000Other
              19,2971,208,621Less:
                  Current portion of notes and loans payable
              890,438$
                  318,183


(1)
      On
      July 23, 2004, the Company borrowed an aggregate of $500,000 from the City
      of
      Baltimore Development Corporation and the Maryland Department of Business and
      Economic Development payable in aggregate remaining equal monthly installments
      of $4,615 over five years, with interest at 4%, per annum. Proceeds were used
      to
      purchase equipment of $450,000, which together with certain other equipment
      of
      the Company, collateralize the borrowings. Loans from certain officers and
      directors of approximately $308,000 have been subordinated.




As
      required under the borrowings, the Company has obtained a revolving line of
      credit of $500,000 from a stockholder of the Company under which the Company
      may
      borrow for working capital through July 22, 2009. Loans under the line bear
      interest at the prime rate, plus 2%, per annum, and may be converted into common
      stock at $.065, per share, as defined. The Maryland Department of Business
      and
      Economic Development has guaranteed 80% of the loan and interest thereon. In
      July 2004, the Company borrowed $500,000 under the line of credit. As of
      December 31, 2005, the interest rate was 9%, per annum. Financing expenses
      in
      connection with these borrowings were $80,146 and are being amortized over
      the
      term of the borrowings.




(2)
      Subject to forgiveness upon the vendor's sale of shares of the Company’s common
      stock.




9.
      Due to
      Affiliated Companies





Due
      to
      affiliated companies, owned by the chief executive officer of the
      Company, on demand, with interest at 10%, per annum.





10.
      Loans
      Payable - Officer/Directors





As
      of
      December 31, 2005, loans payable - officer / directors consisted
      of:





Note
                payable to the chief executive officerand
                the chairman of the board of theCompany,
                due on demand, with interestat
                prime, plus 2%, per annum (1)
            $
                200,000Notes
                payable to a directors
            108,300$
                308,300





F-10




(1)
      The
      same terms as an underlying borrowing from a bank and collateralized by certain
      equipment. As of December 31, 2005 the interest rate was 9%, per
      annum.





11.
      Income Taxes





The
      Company files consolidated income tax returns with its subsidiaries. Prior
      to
      its acquisition, PPSI was a Subchapter S Corporation.





As
      of
      December 31, 2005, the Company had net operating loss carry forwards of
      approximately $14,950,000 available to reduce future taxable income expiring
      through 2025, which may be limited due to ownership changes.





For
      the
      years ended December 31, 2005 and 2004, the Company's deferred tax benefits
      (expenses) were as follows:





2005
            
            
            2004Net
                operating loss carry forwards
            
            $
            632,000
            
            $
            615,000Depreciation
            
            
            7,000
            
            
            191,000Goodwill
            
            
            (45,000
            )
            
            (19,000
            )Compensation
            
            
            230,000
            
            
            132,000Inventory
                and equipment valuationallowances
            
            
            -
            
            
            60,000Valuation
                allowance
            
            
            (824,000
            )
            
            (979,000
            )None
            
            
            None





As
      of
      December 31, 2005, the tax effects of the components of deferred tax assets
      and
      liabilities were as follows:





Deferred
                tax assetsNet
                operating loss carry forwards
            
            $
            6,000,000Compensation
            
            
            712,000Goodwill
            
            
            509,000Total
                deferred tax asset
            
            
            7,221,000Deferred
                tax liabilitiesDepreciation
            
            
            (91,000
            )Net
                deferred tax asset
            
            
            7,130,000Valuation
                allowance
            
            
            (7,130,000
            )None





As
      of
      December 31, 2005, realization of the Company's net deferred tax asset of
      approximately $7,130,000 was not considered more likely than not and,
      accordingly, a valuation allowance of $7,130,000 was provided.





The
      following is a reconciliation of expected income tax benefit utilizing the
      Federal statutory tax rate to income tax benefit reported on the statement
      of
      operations.





2005
            
            
            2004Expected
                income tax benefit
            
            $
            (632,000
            )
            $
            (437,000
            )Change
                in valuation allowance arising in current year
            
            
            1,233,000
            
            
            1,164,000State
                income tax benefit, net of federal income tax effect
            
            
            (120,000
            )
            
            (107,000
            )Other
            
            
            (481,000
            )
            
            (620,000
            )None
            
            
            None







F-11




12.
      Commitments and Contingency





Lease





The
      Company was committed under a non-cancelable lease for production, storage
      and
      office space through July 2005. The lease provides for minimum annual rent
      of
      $72,000, additional rents for the Company's share of normal maintenance plus
      its
      pro-rata share of real estate taxes and eight one year renewals at the Company's
      option. This lease was terminated on February 6, 2006.





For
      2005
      and 2004, total rent expense was $72,000 and $78,000, respectively.





Employment
      Agreement





The
      Company is committed under an employment agreement to the chief executive
      officer, through January 2005, requiring annual compensation to be determined
      annually by the officer and Company. Annually, the agreement shall automatically
      renew for one year, resulting in a new three year term each January 1. For
      the
      years ended December 31, 2005 and 2004, the compensation was $435,600 and
      $396,000, respectively, which have been fully deferred by the chief executive
      officer. The agreement also provides for bonuses, as determined by the officer
      and the Company, an automobile allowance (of $24,000, per annum, for 2005)
      and
      life, disability and health insurance. In addition, the officer was granted
      options to purchase 2,000,000 shares of common stock exercisable at $.24, per
      share, through 2012. The options vest 25% on January 1, 2003 and $41,667 during
      each subsequent month.





13.
      Litigation Reserve





In
      December 2003, the Company assigned certain of their patents, earned royalties
      of $72,125 and 85% of all future royalties being earned from these patents
      in
      payment of a note payable and interest thereon for an aggregate of $99,434,
      in
      settlement of the matter. The Company recognized a $24,872 gain upon
      extinguishment of the debt. The Company in turn received relief from the
      restrictive patent payments and a perpetual license to exploit, market and
      manufacture these patents in North America. As the value of the license received
      could not be determined, no value was assigned to them.





In
      March
      2004, the Company settled a collection matter with a former consultant in the
      amount of $165,000, payable in varying amounts through March 2007 and options
      to
      purchase 359,375 shares of common stock of the Company, all of which have been
      accrued as of December 31, 2003.





In
      February 2000, a former consultant commenced an action against the Company
      and
      its directors, alleging breach of contract and fiduciary duty, and is seeking
      consulting fees in the amount of: (1) 250,000 shares of common stock, (2)
      $192,000 and (3) costs of this action. The Company and counsel do not believe
      the consulting fees are due and will continue to vigorously defend this
      action.




14.
      Stockholders' Equity





Common
      Stock





During
      the year ended December 31, 2004, the Company issued an aggregate of 2,660,034
      shares of common stock to a stockholder and three officers in payment of notes
      and loans of $10,000, deferred payroll of $$50,000 and and benefits of
      $125,262.




In
      November 2004, the Company exchanged 6,000,000 shares of common stock for
      $240,000 of professional consulting services over a one-year term.





On
      April
      6, 2005, the Company issued 1,386,527 common shares to a preferred stockholder
      in exchange for 70 shares of Series E preferred stock and unpaid dividends
      worth
      an aggregate of $5,843.





On
      June
      28, 2005, the Company issued 1,896,970 shares of common stock to two officers
      in
      exchange for operating expenses incurred by them but not previously
      paid.





On
      June
      29, 2005, the Company issued 1,500,000 shares of common stock to an independent
      marketing consultant in exchange for fees not paid of $45,000.





On
      June
      30, 2005, the Company issued 1,286,082 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $42,441.




On
      June
      30, 2005, the Company converted $70,000 of notes payable to an affiliate owned
      by an executive officer in exchange for 2,333,333 shares of common
      stock.





On
      October 10, 2005, the Company issued 1,169,850 shares of common stock to an
      officer/director of the Company in exchange for benefits not taken of
      $12,868.






F-12







Preferred
      Stock




Series
      D


The
      Company has designated 1,250,000 shares of 5% cumulative convertible preferred
      stock (Series D), which are entitled to receive, prior to the payment of
      dividends to the common stock, cumulative dividends of 5%, per share, per annum.
      The Series D stock may be redeemed at the option of the Company, in cash at
      $2.40, per share. In addition, Series D stockholders are entitled to a
      liquidation preference of $2.40, per share, plus unpaid dividends. Each share
      of
      Series D is initially convertible into three shares of common
      stock.





During
      December 2004 and again during March, 2005 the Company sold 20,833 shares of
      Series D preferred stock to a customer for $50,000 for each respective group
      of20,833 shares. At December 31, 2005, another $150,000 is receivable from
      the
      shareholderfor Series D stock purchase commitments due under this
      agreement.





Series
      E


In
      August
      2003, the Company designated 2,000 shares of 5% cumulative convertible preferred
      stock (Series E), which are entitled to receive, prior to the payment of
      dividends to the Series D and common stock, cumulative dividends of 5%, per
      share, per annum. The Series E stock may be redeemed at the option of the
      Company, in cash, at 135% of the stated value, per share, plus all unpaid
      dividends. In addition, Series E stockholders are entitled to a liquidation
      preference of $1,000, per share, plus all unpaid dividends. Each share of Series
      E is convertible into shares of common stock at the lesser of $1.10 or 80%
      of
      market value, as defined. InAugust 2006, the Company is required to convert
      all
      the Series E into common stock at the conversion price, unless the holder
      becomes a 5% or greater stockholder. The Company may redeem the Series E in
      cash
      at $1,350, per share, plus all unpaid dividends, as defined.





On
      August
      5, 2003, the Company exchanged 122 shares of Series B and 250 shares of Series
      C, all the outstanding shares, for 522 shares of Series E.





In
      2005
      and 2004, 100 and 80 shares, respectively of Series E were converted into
      2,191,215 and 1,790,431 shares of common stock at prices ranging from $.03
      to
      $.06, per share.





Holders
      of preferred shares have no voting rights.





As
      of
      December 31, 2005, cumulative dividends in arrears on preferred


stock
      were:




Series
                D
            $
                54,272Series
                E
            38,747$
                93,019





Non
      Plan
      Options





During
      the year ended December 31, 2004, the Company issued options to purchase an
      aggregate of 1,050,000 shares of common stock of the Company to two officers
      and
      an employee. The options are exercisable at $.04, per share, through December
      2009 and were valued at $4,000.





During
      the year ended December 31, 2005, the Company issued no options to purchase
      common stock of the Company





During
      2005 and 2004, options to purchase 802,236 and 4,850,000 shares, respectively,
      of common stock expired or were cancelled without being exercised.




F-13




Reserved
      Shares





As
      of
      December 31, 2005, the Company has reserved shares of common stock as
      follows:







Non-plan
                options and warrants
            7,446,862Options
                under the Plans
            685,000Series
                D conversions
            350,000Series
                E conversions(a)
            17,537,350Litigation
            250,00026,269,212





(a)
      assumes conversions as of December 31, 2005 at $.02, per share.








15.
      Stock
      Option Plans





The
      1996
      Stock Option Plan (96 Plan) is administered by the Board of Directors or a
      committee thereof and options to purchase 4,709,219 shares of common stock
      may
      be granted under the Plan to directors, employees (including officers) and
      consultants to the Company. The Plan authorizes the issuance of incentive stock
      options (ISO's), as defined in Section 422A of the Internal Revenue Code of
      1986, as amended, and non-qualified stock options (NQSO's). Consultants and
      directors who are not also employees of the Company are eligible for grants
      of
      only NQSOs. The exercise price of each ISO may not be less than 100% of the
      fair
      market value of the common stock at the time of grant, except that in the case
      of a grant to an employee who owns 10% or more of the outstanding stock of
      the
      Company or a subsidiary or parent of the Company, the exercise price may not
      be
      less than 110% of the fair market value on the date of grant. The aggregate
      fair
      market value of the shares covered by ISO's granted under the Plan that become
      exercisable by a Plan participant for the first time in any calendar year is
      subject to a $100,000 limitation. The exercise price of each NQSO is determined
      by the Board, or committee thereof, in its discretion; provided that NQSO's
      granted a 10% Stockholder be no less than 110% of the fair market value on
      the
      date of grant.




Under
      the
      1998 Stock Option Plan (98 Plan), the Company may grant options to purchase
      300,000 shares of common stock to employees, directors, independent contractors
      and consultants of the Company. The 98 Plan is similar to the Plan and
      authorizes the issuance of ISO's, NQSO's and Stock Appreciation
      Rights.




Under
      the
      2000 Stock Option Plan (2000 Plan), the Company may grant options to purchase
      2,000,000 shares of common stock to employees, directors, independent
      contractors and consultants of the Company. The Plan includes options to
      purchase an addition 250,000 shares of common stock, reserved for an Industrial
      and Scientific Advisory Committee to be formed as necessitated by the
      Company.





The
      following table summarizes the activity of the Plans for 2005 and
      2004.








2005
            2004Weighted
            
            
            
            
            
            WeightedAverage
            
            
            
            
            
            AverageExercise
            
            
            
            
            
            ExerciseShares
            
            
            Price
            
            
            Shares
            
            
            PriceOptions
                outstanding, beginning of year
            
            
            1,335,000
            
            $
            0.70
            
            
            1,335,000
            
            $
            0.70Granted
            
            
            None
            
            
            -
            
            
            None
            
            
            -Canceled,
                exercised, expired or exchanged
            
            
            (650,000
            )
            $
            0.675
            
            
            None
            
            
            -Options
                outstanding, end of year
            
            
            685,000
            
            $
            0.72
            
            
            1,335,000
            
            $
            0.70Options
                exercisable, end of year
            
            
            685,000
            
            $
            0.72
            
            
            1,335,000
            
            $
            0.70Options
                available for grant, end of year
            
            
            1,050,000
            
            
            
            
            
            1,050,000Weighted-average
                fair value of options grantedduring
                the year
            
            $
            .00
            
            
            
            
            $
            .00








F-14




The
      following table summarizes information about stock options
      outstanding


under
      the
      Plan at December 31, 2005:





WeightedAverage
              
              WeightedRemaining
              
              AverageRange
                  of
              Outstanding
              Contractual
              Exercisable
              ExercisableExercise
                  Prices
              Options
              Life
                  (Years)
              Options
              Price$3.50
              65,000
              1.50
              65,000
              $3.50$2.00
              70,000
              2.00
              70,000
              $2.00$0.50
              100,000
              5.25
              100,000
              $0.50$0.24
              35,000
              7.00
              35,000
              $0.24$0.20
              60,000
              0.75
              60,000
              $0.20$0.15
              355,000
              4.50
              355,000
              $0.15$0.15
                  to $3.50
              685,000
              2.70
              685,000
              $0.72


16.
      Sales
      of Technology





Through
      September 1, 2003, the Company licensed the non-exclusive, Worldwide use of
      the
      Company's patents for the manufacture, use and marketing of its auto-disable
      syringes providing for royalties on sales. In December 2003, the Company sold
      this license and assigned certain patents to a creditor in payment of $99,433
      and also assigned certain future royalties under the auto-disable syringe
      licensing agreement. The Company has licensed back the rights under these
      patents to market and manufacture in North America.




17.
      Discontinued Operations




On
      August
      16, 2004, in settlement of litigation, the Company sold TWT, a wholly-owned
      subsidiary, to an officer of the Company and his related parties, all former
      owners of TWT, in exchange for 404,154 shares of common stock of the Company,
      cancellation of deferred compensation to the officer of $221,042 and
      cancellation of the officer’s employment agreement. In addition, the officer
      received options to purchase 97,710 shares of common stock of the Company,
      exercisable at $.01, per share, for 10 years and the other purchasers received
      option to purchase 296,444 shares of common stock of the Company, exercisable
      at
      $.07, per share, for 10 years. The officer also will receive $100,000 in cash,
      payable in monthly installments of $10,000, commencing August 2004 and medical
      insurance payments of $3,600.




Expenses
      in connection with the sale were $87,307.







F-15




18.
      Goodwill





Goodwill
      had represented the excess purchase prices paid by the Company over the fair
      value of the tangible and other intangible assets and liabilities at the dates
      of acquisitions. Goodwill had not been amortized, but instead was subject to
      an
      annual assessment of impairment by applying a fair-value based test. The Company
      evaluated the carrying value of goodwill as of December 31, 2004. During the
      year ended December 31, 2004. The Company determined the carrying value of
      goodwill has been fully impaired and wrote-off the carrying value of
      $1,774,119.





19.
      Subsequent Events





Common
      Stock





In
      February 2006, the Company issued an aggregate of 1,410,639 shares of common
      stock to an executive officer of the Company in exchange for accrued employment
      contract benefits of $29,842.





In
      July
      2006, the Company issued an aggregate of 3,264,669 shares of common stock to
      an
      executive officer of the Company in exchange for accrued employment contract
      benefits of $42,441.





On
      July
      19, 2006 the Board of Directors declared of a one for ten common share reverse
      stock split. The reverse stock split was authorized by the corporate
      shareholders at the annual stockholders meeting, which was held on October
      14,
      2005.





Due
      to
      Affiliated Companies





Subsequent
      to December 31, 2005, the Company borrowed an additional **$** 4,208
      from the


affiliated
      companies.





F-16






20.
              Selected Quarterly Financial Data - 2005
              (Unaudited)Univec,
                Inc. and SubsidiariesBalance
                SheetsDecember
                31, 2005
            
            
            September
                30, 2005
            
            
            June
                30, 2005
            
            
            March
                31, 2005AssetsCash
            
            $
            991
            
            $
            3,301
            
            $
            2,970
            
            $
            10,079Accounts
                receivable
            
            
            174,864
            
            
            970,529
            
            
            3,066,601
            
            
            2,956,590Inventories
            
            
            193,325
            
            
            179,877
            
            
            179,878
            
            
            179,878Certificates
                of
                Deposit -Restricted
            
            
            
            
            
            348,949
            
            
            340,407
            
            
            340,407Other
                current
                assets
            
            
            
            
            
            
            
            
            
            
            
            5,967Total
                current
                assets
            
            
            369,180
            
            
            1,502,656
            
            
            3,589,856
            
            
            3,492,921Fixed
                assets -
                net
            
            
            520,092
            
            
            542,031
            
            
            578,139
            
            
            606,185Other
                assets
            
            
            64,638
            
            
            67,310
            
            
            70,117
            
            
            75,461Total
                assets
            
            $
            953,910
            
            $
            2,111,997
            
            $
            4,238,112
            
            $
            4,174,567Liabilities
                and Stockholders DeficitAccounts
                payable
                &accrued
                expenses
            
            $
            1,598,524
            
            $
            2,310,356
            
            $
            4,279,589
            
            $
            4,180,057Deferred
                payroll
            
            
            1,878,483
            
            
            1,711,081
            
            
            1,535,309
            
            
            1,354,639Notes
                and loans pay-
                current
            
            
            890,438
            
            
            1,334,446
            
            
            1,337,946
            
            
            1,417,199Loans
                payable –officers/directors
            
            
            258,300
            
            
            265,493
            
            
            260,493
            
            
            260,493Due
                to affiliatedcompanies
            
            
            815,510
            
            
            752,360
            
            
            684,175
            
            
            685,225Total
                current liabilities
            
            
            5,441,255
            
            
            6,373,736
            
            
            8,097,512
            
            
            7,897,613Notes
                and
                loanspayable
                - long-term
            
            
            318,183
            
            
            216,332
            
            
            258,352
            
            
            211,152Loans
                payable –officers/directors
                long-term
            
            
            50,000Total
                liabilities
            
            
            5,809,438
            
            
            6,590,068
            
            
            8,355,864
            
            
            8,108,765Stockholders’
                deficitPreferred
                stock – D
            
            
            208
            
            
            146
            
            
            146
            
            
            146Preferred
                stock –
                E
            
            
            1
            
            
            1
            
            
            1
            
            
            1Common
                stock
            
            
            57,634
            
            
            56,464
            
            
            56,465
            
            
            48,062Additional
                paid-incapital
            
            
            11,514,390
            
            
            11,352,754
            
            
            11,352,754
            
            
            11,135,273Treasury
                stock
            
            
            (28,291
            )
            
            (28,291
            )
            
            (28,291
            )
            
            (28,291
            )Stock
                subscription
            
            
            
            
            
            (30,000
            )
            
            (90,000
            )
            
            (150,000
            )Accumulated
                deficit
            
            
            (16,399,470
            )
            
            (15,829,145
            )
            
            (15,408,827
            )
            
            (14,939,389
            )Total
                stockholders'deficit
            
            
            (4,855,528
            )
            
            (4,478,071
            )
            
            (4,117,752
            )
            
            (3,934,198
            )Total
                liabilities andstockholders
                deficit
            
            $
            953,910
            
            $
            2,111,997
            
            $
            4,238,112
            
            $
            4,174,567





F-17






20.
              Selected Quarterly Financial Data - 2004
              (Unaudited)Univec,
                Inc. and SubsidiariesBalance
                Sheets  December
                  31, 2004
              
              
              September
                  30, 2004
              
              
              June
                  30, 2004
              
              
              March
                  31, 2004AssetsCash
              
              $
              29,443
              
              $
              8,024
              
              $
              49,162
              
              $
              852Marketable
                  securities
              
              
              36,349Accounts
                  receivable
              
              
              3,123,493
              
              
              1,628,446
              
              
              1,508,933
              
              
              1,472,635Inventories
              
              
              179,878
              
              
              269,672
              
              
              301,913
              
              
              295,248CDs
                  -
                  restricted
              
              
              340,407
              
              
              335,000
              
              
              335,000Other
                  current
                  assets
              
              
              46,630
              
              
              83,341
              
              
              96,297
              
              
              124,888Total
                  current
                  assets
              
              
              3,756,200
              
              
              2,324,483
              
              
              2,291,305
              
              
              1,893,623Fixed
                  assets -
                  net
              
              
              622,685
              
              
              894,802
              
              
              542,401
              
              
              587,598Goodwill
              
              
              
              
              
              1,774,119
              
              
              2,328,662
              
              
              2,328,662Other
                  assets
              
              
              79,468
              
              
              83,475
              
              
              6,000
              
              
              6,000Total
                  assets
              
              $
              4,458,353
              
              $
              5,076,879
              
              $
              5,168,368
              
              $
              4,815,883Liabilities
                  and Stockholders DeficitAccounts
                  payable
                  &accrued
                  expenses
              
              $
              4,380,826
              
              $
              2,946,251
              
              $
              2,877,647
              
              $
              2,762,038Deferred
                  payroll
              
              
              1,271,488
              
              
              1,092,697
              
              
              1,261,588
              
              
              1,064,292Notes
                  and loans pay-
                  current
              
              
              1,472,163
              
              
              1,065,795
              
              
              350,872
              
              
              166,376Loans
                  payable –officers/directors
              
              
              260,493
              
              
              260,493
              
              
              270,493
              
              
              270,493Due
                  to affiliatedcompanies
              
              
              578,800
              
              
              504,643
              
              
              663,452
              
              
              328,017Total
                  current liabilities
              
              
              7,963,770
              
              
              5,869,879
              
              
              5,424,052
              
              
              4,591,216Notes
                  and
                  loanspayable
                  - long-term
              
              
              211,852
              
              
              696,814
              
              
              409,051
              
              
              497,033Total
                  liabilities
              
              
              8,175,622
              
              
              6,566,693
              
              
              5,833,103
              
              
              5,088,249Stockholders’
                  deficitPreferred
                  stock – D
              
              
              125
              
              
              104
              
              
              104
              
              
              104Preferred
                  stock –
                  E
              
              
              1
              
              
              1
              
              
              1
              
              
              1Common
                  stock
              
              
              45,619
              
              
              38,628
              
              
              37,872
              
              
              37,872Additional
                  paid-incapital
              
              
              10,977,627
              
              
              10,690,639
              
              
              10,661,408
              
              
              10,661,408Treasury
                  stock
              
              
              (28,291
              )
              
              (28,291
              )Stock
                  subscription
              
              
              (210,000
              )Accumulated
                  deficit
              
              
              (14,502,350
              )
              
              (12,190,895
              )
              
              (11,364,120
              )
              
              (10,971,751
              )Total
                  stockholders'deficit
              
              
              (3,717,269
              )
              
              (1,489,814
              )
              
              (664,735
              )
              
              (272,366
              )Total
                  liabilities andstockholders
                  deficit
              
              $
              4,458,353
              
              $
              5,076,879
              
              $
              5,168,368
              
              $
              4,815,883


F-18




20. Selected
                  Quarterly Financial Data – 2005 (Unaudited)Univec,
                  Inc. and SubsidiariesStatements
                  of OperationsYear
                  ended
              
              
              Three
                  months ended
              
              
              Nine
                  months ended
              
              
              Three
                  months ended
              
              
              Six
                  months ended
              
              
              Three
                  months ended
              
              
              Three
                  months endedDec.
                  31, 2005
              
              
              Dec.
                  31, 2005
              
              
              Sept.
                  30, 2005
              
              
              Sept.
                  30, 2005
              
              
              June
                  30, 2005
              
              
              June
                  30, 2005
              
              
              March
                  31, 2005Revenues
              
              $
              81,398
              
              $
              3,014
              
              $
              78,384
              
              
              ($6,683
              )
              $
              85,067
              
              $
              45,056
              
              $
              40,011Cost
                  of revenues
              
              
              3,164
              
              
              9,176
              
              
              (6,012
              )
              
              17,135
              
              
              (23,147
              )
              
              (8,201
              )
              
              (14,946
              )Gross
                  margin
              
              
              84,562
              
              
              12,190
              
              
              72,372
              
              
              10,452
              
              
              61,920
              
              
              36,855
              
              
              25,065Operating
                  expensesMarketing
                  and
                  selling
              
              
              (233,990
              )
              
              (1,015
              )
              
              (232,975
              )
              
              (74,897
              )
              
              (158,078
              )
              
              (65,988
              )
              
              (92,090
              )Product
                  development
              
              
              (3,802
              )
              
              (3,154
              )
              
              (648
              )
              
              0
              
              
              (648
              )
              
              (648
              )General
&
                  administrative
              
              
              (1,535,840
              )
              
              (524,333
              )
              
              (1,011,507
              )
              
              (283,161
              )
              
              (728,346
              )
              
              (389,941
              )
              
              (338,405
              )Total
                  operating
                  expenses
              
              
              (1,773,632
              )
              
              (528,502
              )
              
              (1,245,130
              )
              
              (358,058
              )
              
              (887,072
              )
              
              (456,577
              )
              
              (430,495
              )Loss
                  from operations
              
              
              (1,689,070
              )
              
              (516,312
              )
              
              (1,172,758
              )
              
              (347,606
              )
              
              (825,152
              )
              
              (419,722
              )
              
              (405,430
              )Other
                  income (expense)Interest
                  expense,
                  net
              
              
              (200,019
              )
              
              (54,012
              )
              
              (146,007
              )
              
              (72,712
              )
              
              (73,295
              )
              
              (43,874
              )
              
              (29,421
              )Total
                  other income(expense)
              
              
              (200,019
              )
              
              (54,012
              )
              
              (146,007
              )
              
              (72,712
              )
              
              (73,295
              )
              
              (43,874
              )
              
              (29,421
              )Net
                  loss
              
              
              (1,889,089
              )
              
              (570,324
              )
              
              (1,318,765
              )
              
              (420,318
              )
              
              (898,447
              )
              
              (463,596
              )
              
              (434,851
              )Dividends
                  attributable topreferred
                  stock
              
              
              (34,844
              )
              
              (9,704
              )
              
              (26,631
              )
              
              (8,213
              )
              
              (18,418
              )
              
              (8,213
              )
              
              (10,205
              )Loss
                  attributable tocommon
                  stockholders
              
              
              ($1,923,933
              )
              
              ($502,810
              )
              
              ($1,345,396
              )
              
              ($428,531
              )
              
              ($916,865
              )
              
              ($471,809
              )
              
              ($445,056
              )Basic
                  net loss per share
              
              
              ($0.04
              )
              
              ($0.01
              )
              
              ($0.03
              )
              
              ($0.01
              )
              
              ($0.02
              )
              
              ($0.01
              )
              
              ($0.01
              )Basic
                  weighted avgnumber
                  commonshares
                  outstanding
              
              
              52,729,533
              
              
              57,634,282
              
              
              50,999,828
              
              
              56,464,432
              
              
              48,222,239
              
              
              49,500,728
              
              
              47,330,653





F-19




20. Selected
                Quarterly Financial Data – 2004 (Unaudited)Univec,
                Inc. and SubsidiariesStatements
                of Operations  Year
                  ended
              
              
              Three
                  months ended
              
              
              Nine
                  months ended
              
              
              Three
                  months ended
              
              
              Six
                  months ended
              
              
              Three
                  months ended
              
              
              Three
                  months endedDec.
                  31, 2004
              
              
              Dec.
                  31, 2004
              
              
              Sept.
                  30, 2004
              
              
              Sept.
                  30, 2004
              
              
              June
                  30, 2004
              
              
              June
                  30, 2004
              
              
              March
                  31, 2004Revenues
              
              $
              327,827
              
              $
              31,658
              
              $
              296,169
              
              $
              99,631
              
              $
              196,538
              
              $
              171,688
              
              $
              24,850Cost
                  of revenues
              
              
              (128,933
              )
              
              (71,997
              )
              
              (56,936
              )
              
              (33,861
              )
              
              ($23,075
              )
              
              (38,511
              )
              
              15,436Gross
                  margin
              
              
              198,894
              
              
              (40,339
              )
              
              239,233
              
              
              65,770
              
              
              173,463
              
              
              133,177
              
              
              40,286Operating
                  expensesMarketing
                  and
                  selling
              
              
              (123,400
              )
              
              (7,986
              )
              
              (115,414
              )
              
              14,052
              
              
              (129,466
              )
              
              (5,328
              )
              
              (124,138
              )Product
                  development
              
              
              (28,871
              )
              
              (609
              )
              
              (28,262
              )
              
              (25,530
              )
              
              (2,732
              )
              
              (1,886
              )
              
              (846
              )General
&
                  administrative
              
              
              (1,772,246
              )
              
              (457,965
              )
              
              (1,314,281
              )
              
              (393,881
              )
              
              (920,400
              )
              
              (486,329
              )
              
              (434,071
              )Loss
                  on write-off
                  ofgoodwill
              
              
              (1,774,119
              )
              
              (1,774,119
              )Total
                  operating
                  expenses
              
              
              (3,698,636
              )
              
              (2,240,679
              )
              
              (1,457,957
              )
              
              (405,359
              )
              
              (1,052,598
              )
              
              (493,543
              )
              
              (559,055
              )Loss
                  from operations
              
              
              (3,499,742
              )
              
              (2,281,018
              )
              
              (1,218,724
              )
              
              (339,589
              )
              
              (879,135
              )
              
              (360,366
              )
              
              (518,769
              )Other
                  income (expense)Interest
                  expense,
                  net
              
              
              (108,092
              )
              
              (23,288
              )
              
              (84,804
              )
              
              (38,424
              )
              
              (46,380
              )
              
              (32,003
              )
              
              (14,377
              )Gain
                  on extinguishmentof
                  debt
              
              
              144,819
              
              
              64,225
              
              
              80,594
              
              
              40,554
              
              
              40,040
              
              
              0
              
              
              40,040Other
                  income (expense)
              
              
              47,795
              
              
              47,795Total
                  other income(expense)
              
              
              84,522
              
              
              88,732
              
              
              (4,210
              )
              
              2,130
              
              
              (6,340
              )
              
              (32,003
              )
              
              25,663Loss
                  from continuingoperations
              
              
              (3,415,220
              )
              
              (2,192,286
              )
              
              (1,222,934
              )
              
              (337,459
              )
              
              (885,475
              )
              
              (392,369
              )
              
              (493,106
              )Loss
                  from discontinuedoperationsDiscontinued
                  operatinglosses
              
              
              (8,260
              )
              
              
              
              
              (8,260
              )
              
              (8,260
              )Loss
                  on sale ofsubsidiary
              
              
              (597,056
              )
              
              (116,000
              )
              
              (481,056
              )
              
              (481,056
              )Net
                  loss
              
              
              (4,020,536
              )
              
              (2,308,286
              )
              
              (1,712,250
              )
              
              (826,775
              )
              
              (885,475
              )
              
              (392,369
              )
              
              (493,106
              )Dividends
                  attributable topreferred
                  stock
              
              
              (35,921
              )
              
              (8,721
              )
              
              (27,200
              )
              
              (8,650
              )
              
              (18,550
              )
              
              (9,275
              )
              
              (9,275
              )Loss
                  attributable tocommon
                  stockholders
              
              
              ($4,056,457
              )
              
              ($2,317,007
              )
              
              ($1,739,450
              )
              
              ($835,425
              )
              
              ($904,025
              )
              
              ($401,644
              )
              
              ($502,381
              )Basic
                  net loss per share
              
              
              ($0.11
              )
              
              ($0.06
              )
              
              ($0.05
              )
              
              ($0.02
              )
              
              ($0.02
              )
              
              ($0.01
              )
              
              ($0.01
              )Basic
                  weighted avg
              
              
              38,510,467
              
              
              39,393,090
              
              
              37,394,433
              
              
              38,244,097
              
              
              36,952,559
              
              
              37,871,795
              
              
              35,331,157number
                  commonshares
                  outstanding





F-20


20. Selected
                  Quarterly Financial Data – 2005 (Unaudited)Univec,
                  Inc. and SubsidiariesStatement
                  of Cash FlowYear
                  Ended
              
              
              Nine
                  Months Ended
              
              
              Six
                  MonthsEnded
              
              
              Three
                  Months EndedDecember
                  31, 2005
              
              
              September
                  30, 2005
              
              
              June
                  30, 2005
              
              
              March
                  30, 2005Cash
                  flows from operating activitiesNet
                  loss
              
              
              ($1,889,089
              )
              
              ($1,318,765
              )
              
              ($898,447
              )
              
              ($434,851
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating
                  activitiesDepreciation
                  and
                  amortization
              
              
              342,122
              
              
              286,312
              
              
              187,397
              
              
              94,007Stock
                  based
                  compensation
              
              
              167,198
              
              
              167,198
              
              
              167,198Gain
                  on receipt of
                  marketable securities
              
              
              36,349
              
              
              36,349
              
              
              36,349
              
              
              36,349Changes
                  in assets and liabilities, netAccounts
                  receivable
              
              
              3,098,629
              
              
              2,152,963
              
              
              56,891
              
              
              166,902Inventories
              
              
              (13,447
              )Other
                  current
                  assets and other assets
              
              
              45,431
              
              
              46,630
              
              
              46,630
              
              
              40,663Accounts
                  payable
                  and accrued expenses
              
              
              (2,629,243
              )
              
              (2,097,474
              )
              
              (128,241
              )
              
              (210,617
              )Deferred
                  payroll
              
              
              522,068
              
              
              522,364
              
              
              346,592
              
              
              165,922Net
                  cash used in
                  operating activities
              
              
              (319,982
              )
              
              (204,423
              )
              
              (185,631
              )
              
              (141,625
              )Cash
                  flows from investing activitiesPurchases
                  of fixed
                  assets
              
              
              (13,500
              )
              
              (13,500
              )
              
              (13,500
              )
              
              (13,500
              )(Increase)
                  decrease
                  in restricted cash
              
              
              340,407
              
              
              (8,542
              )Net
                  cash used in
                  investing activities
              
              
              326,907
              
              
              (22,042
              )
              
              (13,500
              )
              
              (13,500
              )Cash
                  flows from financing activitiesIncrease
                  in due to
                  affiliated companies
              
              
              306,710
              
              
              243,560
              
              
              175,375
              
              
              106,423Increase
                  in loans
                  payable - officers/directors
              
              
              55,000
              
              
              55,000
              
              
              50,000Proceeds
                  from sale
                  of stock
              
              
              85,000
              
              
              85,000
              
              
              85,000
              
              
              85,000Payments
                  on notes
                  and loans payable
              
              
              (482,587
              )
              
              (183,237
              )
              
              (137,717
              )
              
              (55,662
              )Net
                  cash provided
                  by financing activities
              
              
              (35,877
              )
              
              200,323
              
              
              172,658
              
              
              135,761Net
                  increase (decrease) in cash
              
              
              (28,952
              )
              
              (26,142
              )
              
              (26,473
              )
              
              (19,364
              )Cash,
                  beginning of period
              
              
              29,443
              
              
              29,443
              
              
              29,443
              
              
              29,443Cash,
                  end of period
              
              $
              491
              
              $
              3,301
              
              $
              2,970
              
              $
              10,079
   F-21







20. Selected
                Quarterly Financial Data – 2005 (Unaudited)Univec,
                Inc. and SubsidiariesStatement
                of Cash Flow Year
                  Ended
              
              
              Nine
                  Months Ended
              
              
              Six
                  MonthsEnded
              
              
              Three
                  Months EndedDecember
                  31, 2004
              
              
              September
                  30, 2004
              
              
              June
                  30, 2004
              
              
              March
                  30, 2004Cash
                  flows from operating activitiesNet
                  loss
              
              
              ($4,020,536
              )
              
              ($1,712,250
              )
              
              ($885,475
              )
              
              ($493,106
              )Adjustments
                  to reconcile net loss to net cashused
                  in operating
                  activitiesLoss
                  on write-off
                  of goodwill
              
              
              1,774,119Loss
                  on sale of
                  subsidiary
              
              
              481,719
              
              
              489,316Depreciation
                  and
                  amortization
              
              
              189,008
              
              
              135,686
              
              
              91,135
              
              
              45,938Write-off
                  of
                  equipment
              
              
              57,295Valuation
                  allowance
                  for inventories
              
              
              75,000Stock
                  based
                  compensation
              
              
              4,000Loss
                  (gain) on
                  cancellatioin of capital lease
              
              
              (2,894
              )Gain
                  on
                  extinguishment of debt
              
              
              (98,547
              )
              
              (80,594
              )
              
              (40,040
              )
              
              (40,040
              )Gain
                  on receipt of
                  marketable securities
              
              
              (36,349
              )Other
              
              
              (11,435
              )Changes
                  in assets and liabilities, net ofeffects
                  from sale
                  of TWTAccounts
                  receivable
              
              
              (506,983
              )
              
              (367,110
              )
              
              (235,611
              )
              
              (199,313
              )Inventories
              
              
              17,698
              
              
              2,904
              
              
              (10,198
              )
              
              (3,533
              )Other
                  current assets and
                  other assets
              
              
              (3,320
              )
              
              (104,130
              )
              
              51,338
              
              
              28,332Accounts
                  payable
                  and accrued expenses
              
              
              713,610
              
              
              674,430
              
              
              306,120
              
              
              228,872Deferred
                  payroll
              
              
              619,631
              
              
              440,840
              
              
              496,793
              
              
              299,497Net
                  cash used in
                  operating activities
              
              
              (747,984
              )
              
              (520,908
              )
              
              (225,938
              )
              
              (133,353
              )Cash
                  flows from investing activitiesPurchases
                  of fixed
                  assets (net of capitalized
              
              
              (397,068
              )
              
              (397,068
              )Increase
                  in
                  restricted cash
              
              
              (340,407
              )
              
              (335,000
              )
              
              (335,000
              )Cash
                  used in sale
                  of subsidiary (net of notes andother
                  payables in
                  2004)
              
              
              (5,670
              )
              
              (92,977
              )Net
                  cash used in
                  investing activities
              
              
              (743,145
              )
              
              (825,045
              )
              
              (335,000
              )
              
              0Cash
                  flows from financing activitiesProceeds
                  from notes
                  and loans payable,net
                  of
                  expenses
              
              
              1,104,344
              
              
              1,184,623
              
              
              140,585Increase
                  in due to
                  affiliated companies
              
              
              567,193
              
              
              270,883
              
              
              429,693
              
              
              92,283Increase
                  in loans
                  payable - officers/directors
              
              
              54,000
              
              
              54,000
              
              
              54,000
              
              
              54,000Proceeds
                  from sale
                  of stock
              
              
              50,000Payments
                  on notes
                  and loans payable
              
              
              (242,386
              )
              
              (167,350
              )
              
              (25,999
              )
              
              (23,899
              )Payments
                  of
                  capitalized lease obligations
              
              
              (21,232
              )Dividends
                  converted
                  to proferred stock
              
              
              (3,168
              )Net
                  cash provided
                  by financing activities
              
              
              1,508,751
              
              
              1,342,156
              
              
              598,279
              
              
              122,384Net
                  increase (decrease) in cash
              
              
              17,622
              
              
              (3,797
              )
              
              37,341
              
              
              (10,969
              )Cash,
                  beginning of period
              
              
              11,821
              
              
              11,821
              
              
              11,821
              
              
              11,821Cash,
                  end of period
              
              $
              29,443
              
              $
              8,024
              
              $
              49,162
              
              $
              852
    F-22